Correlation Between HANOVER INSURANCE and China Construction
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and China Construction 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 HANOVER INSURANCE and China Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and China Construction Bank, you can compare the effects of market volatilities on HANOVER INSURANCE and China Construction 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 HANOVER INSURANCE with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and China Construction.
Diversification Opportunities for HANOVER INSURANCE and China Construction
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HANOVER and China is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank and HANOVER INSURANCE 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 HANOVER INSURANCE are associated (or correlated) with China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and China Construction go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and China Construction
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 1.21 times less return on investment than China Construction. But when comparing it to its historical volatility, HANOVER INSURANCE is 2.01 times less risky than China Construction. It trades about 0.18 of its potential returns per unit of risk. China Construction Bank is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 62.00 in China Construction Bank on September 4, 2024 and sell it today you would earn a total of 12.00 from holding China Construction Bank or generate 19.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HANOVER INSURANCE vs. China Construction Bank
Performance |
| Timeline |
| HANOVER INSURANCE |
| China Construction Bank |
HANOVER INSURANCE and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and China Construction
The main advantage of trading using opposite HANOVER INSURANCE and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, China Construction 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 China Construction will offset losses from the drop in China Construction's long position.| HANOVER INSURANCE vs. TOTAL GABON | HANOVER INSURANCE vs. Walgreens Boots Alliance | HANOVER INSURANCE vs. Peak Resources Limited |
| China Construction vs. MOVIE GAMES SA | China Construction vs. ALERION CLEANPOWER | China Construction vs. GEAR4MUSIC LS 10 | China Construction vs. HANOVER INSURANCE |
Check out your portfolio center.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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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