Correlation Between Hanover Insurance and PT Bank
Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and PT Bank 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 PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hanover Insurance and PT Bank Maybank, you can compare the effects of market volatilities on Hanover Insurance and PT Bank 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 PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and PT Bank.
Diversification Opportunities for Hanover Insurance and PT Bank
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanover and BOZA is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and PT Bank Maybank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Maybank 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 The Hanover Insurance are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Maybank has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and PT Bank go up and down completely randomly.
Pair Corralation between Hanover Insurance and PT Bank
Assuming the 90 days horizon Hanover Insurance is expected to generate 1.54 times less return on investment than PT Bank. But when comparing it to its historical volatility, The Hanover Insurance is 2.95 times less risky than PT Bank. It trades about 0.03 of its potential returns per unit of risk. PT Bank Maybank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1.34 in PT Bank Maybank on August 30, 2024 and sell it today you would lose (0.14) from holding PT Bank Maybank or give up 10.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hanover Insurance vs. PT Bank Maybank
Performance |
| Timeline |
| Hanover Insurance |
| PT Bank Maybank |
Hanover Insurance and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanover Insurance and PT Bank
The main advantage of trading using opposite Hanover Insurance and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Insurance position performs unexpectedly, PT Bank 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 PT Bank will offset losses from the drop in PT Bank's long position.| Hanover Insurance vs. Tokio Marine Holdings | Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. Beazley PLC |
| PT Bank vs. Stewart Information Services | PT Bank vs. MOVIE GAMES SA | PT Bank vs. UNIVMUSIC GRPADR050 | PT Bank vs. DATAGROUP SE |
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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