Correlation Between Talanx AG and Takara Holdings

Can any of the company-specific risk be diversified away by investing in both Talanx AG and Takara Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Talanx AG and Takara Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Talanx AG and Takara Holdings, you can compare the effects of market volatilities on Talanx AG and Takara Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Talanx AG with a short position of Takara Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and Takara Holdings.

Diversification Opportunities for Talanx AG and Takara Holdings

0.34

Correlation Coefficient

Talanx AG  Takara Holdings

Weak diversification

The 3 months correlation between Talanx and Takara is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and Takara Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takara Holdings and Talanx AG is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Talanx AG are associated (or correlated) with Takara Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takara Holdings has no effect on the direction of Talanx AG i.e., Talanx AG and Takara Holdings go up and down completely randomly.

Pair Corralation between Talanx AG and Takara Holdings

Assuming the 90 days horizon Talanx AG is expected to generate 2.91 times less return on investment than Takara Holdings. But when comparing it to its historical volatility, Talanx AG is 1.09 times less risky than Takara Holdings. It trades about 0.04 of its potential returns per unit of risk. Takara Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  705.00  in Takara Holdings on September 4, 2024 and sell it today you would earn a total of  65.00  from holding Takara Holdings or generate 9.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Talanx AG  vs.  Takara Holdings

Talanx AG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Talanx AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Takara Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Takara Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Takara Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Talanx AG and Takara Holdings

The main advantage of trading using opposite Talanx AG and Takara Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG position performs unexpectedly, Takara Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Takara Holdings will offset losses from the drop in Takara Holdings' long position.

The idea behind Talanx AG and Takara Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.