Correlation Between Cairo Communication and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and Hanover Insurance 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 Cairo Communication and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairo Communication SpA and The Hanover Insurance, you can compare the effects of market volatilities on Cairo Communication and Hanover Insurance 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 Cairo Communication with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Hanover Insurance.
Diversification Opportunities for Cairo Communication and Hanover Insurance
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cairo and Hanover is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Cairo Communication 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 Cairo Communication SpA are associated (or correlated) with Hanover Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Insurance has no effect on the direction of Cairo Communication i.e., Cairo Communication and Hanover Insurance go up and down completely randomly.
Pair Corralation between Cairo Communication and Hanover Insurance
Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 0.73 times more return on investment than Hanover Insurance. However, Cairo Communication SpA is 1.38 times less risky than Hanover Insurance. It trades about 0.18 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.01 per unit of risk. If you would invest 237.00 in Cairo Communication SpA on November 7, 2024 and sell it today you would earn a total of 12.00 from holding Cairo Communication SpA or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Communication SpA vs. The Hanover Insurance
Performance |
| Timeline |
| Cairo Communication SpA |
| Hanover Insurance |
Cairo Communication and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Hanover Insurance
The main advantage of trading using opposite Cairo Communication and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, Hanover Insurance 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 Hanover Insurance will offset losses from the drop in Hanover Insurance's long position.| Cairo Communication vs. NAGOYA RAILROAD | Cairo Communication vs. EVS Broadcast Equipment | Cairo Communication vs. FIREWEED METALS P | Cairo Communication vs. Broadcom |
| Hanover Insurance vs. Siamgas And Petrochemicals | Hanover Insurance vs. China Resources Beer | Hanover Insurance vs. EITZEN CHEMICALS | Hanover Insurance vs. MOLSON RS BEVERAGE |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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