Correlation Between Talanx AG and AJ LUCAS

Can any of the company-specific risk be diversified away by investing in both Talanx AG and AJ LUCAS 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 AJ LUCAS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Talanx AG and AJ LUCAS GROUP, you can compare the effects of market volatilities on Talanx AG and AJ LUCAS 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 AJ LUCAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and AJ LUCAS.

Diversification Opportunities for Talanx AG and AJ LUCAS

-0.42

Correlation Coefficient

Talanx AG  AJ LUCAS

Very good diversification

The 3 months correlation between Talanx and FW9 is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and AJ LUCAS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ LUCAS GROUP 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 AJ LUCAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ LUCAS GROUP has no effect on the direction of Talanx AG i.e., Talanx AG and AJ LUCAS go up and down completely randomly.

Pair Corralation between Talanx AG and AJ LUCAS

Assuming the 90 days horizon Talanx AG is expected to generate 53.85 times less return on investment than AJ LUCAS. But when comparing it to its historical volatility, Talanx AG is 23.3 times less risky than AJ LUCAS. It trades about 0.05 of its potential returns per unit of risk. AJ LUCAS GROUP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.15  in AJ LUCAS GROUP on September 5, 2024 and sell it today you would lose (0.05) from holding AJ LUCAS GROUP or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Talanx AG  vs.  AJ LUCAS GROUP

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.

AJ LUCAS GROUP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AJ LUCAS GROUP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AJ LUCAS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Talanx AG and AJ LUCAS

The main advantage of trading using opposite Talanx AG and AJ LUCAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG position performs unexpectedly, AJ LUCAS 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 AJ LUCAS will offset losses from the drop in AJ LUCAS's long position.

The idea behind Talanx AG and AJ LUCAS GROUP 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.