Correlation Between Hong Kong and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Hong Kong 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 Hong Kong and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Kong Exchanges and The Hanover Insurance, you can compare the effects of market volatilities on Hong Kong 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 Hong Kong with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Hanover Insurance.
Diversification Opportunities for Hong Kong and Hanover Insurance
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hong and Hanover is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Exchanges and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Hong Kong 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 Hong Kong Exchanges 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 Hong Kong i.e., Hong Kong and Hanover Insurance go up and down completely randomly.
Pair Corralation between Hong Kong and Hanover Insurance
Assuming the 90 days trading horizon Hong Kong Exchanges is expected to generate 1.84 times more return on investment than Hanover Insurance. However, Hong Kong is 1.84 times more volatile than The Hanover Insurance. It trades about 0.04 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.04 per unit of risk. If you would invest 2,386 in Hong Kong Exchanges on October 9, 2024 and sell it today you would earn a total of 1,158 from holding Hong Kong Exchanges or generate 48.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Kong Exchanges vs. The Hanover Insurance
Performance |
| Timeline |
| Hong Kong Exchanges |
| Hanover Insurance |
Hong Kong and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and Hanover Insurance
The main advantage of trading using opposite Hong Kong and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong 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.| Hong Kong vs. OPERA SOFTWARE | Hong Kong vs. VITEC SOFTWARE GROUP | Hong Kong vs. Ultra Clean Holdings | Hong Kong vs. CVW CLEANTECH INC |
| Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. Loews Corp | Hanover Insurance vs. Superior Plus Corp | Hanover Insurance vs. NMI Holdings |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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