Correlation Between HANOVER INSURANCE and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and China BlueChemical 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 BlueChemical 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 BlueChemical, you can compare the effects of market volatilities on HANOVER INSURANCE and China BlueChemical 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 BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and China BlueChemical.
Diversification Opportunities for HANOVER INSURANCE and China BlueChemical
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HANOVER and China is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical 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 BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and China BlueChemical go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and China BlueChemical
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to generate 0.45 times more return on investment than China BlueChemical. However, HANOVER INSURANCE is 2.22 times less risky than China BlueChemical. It trades about 0.39 of its potential returns per unit of risk. China BlueChemical is currently generating about 0.07 per unit of risk. If you would invest 13,300 in HANOVER INSURANCE on September 2, 2024 and sell it today you would earn a total of 1,900 from holding HANOVER INSURANCE or generate 14.29% 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 BlueChemical
Performance |
| Timeline |
| HANOVER INSURANCE |
| China BlueChemical |
HANOVER INSURANCE and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and China BlueChemical
The main advantage of trading using opposite HANOVER INSURANCE and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, China BlueChemical 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 BlueChemical will offset losses from the drop in China BlueChemical's long position.| HANOVER INSURANCE vs. SIVERS SEMICONDUCTORS AB | HANOVER INSURANCE vs. Darden Restaurants | HANOVER INSURANCE vs. Reliance Steel Aluminum | HANOVER INSURANCE vs. Q2M Managementberatung AG |
| China BlueChemical vs. Austevoll Seafood ASA | China BlueChemical vs. JJ SNACK FOODS | China BlueChemical vs. Performance Food Group | China BlueChemical vs. Platinum Investment Management |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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