Correlation Between BANK MANDIRI and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI 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 BANK MANDIRI and HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK MANDIRI and HANOVER INSURANCE, you can compare the effects of market volatilities on BANK MANDIRI 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 BANK MANDIRI with a short position of HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and HANOVER INSURANCE.
Diversification Opportunities for BANK MANDIRI and HANOVER INSURANCE
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BANK and HANOVER is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE and BANK MANDIRI 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 BANK MANDIRI 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 BANK MANDIRI i.e., BANK MANDIRI and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between BANK MANDIRI and HANOVER INSURANCE
Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 0.8 times more return on investment than HANOVER INSURANCE. However, BANK MANDIRI is 1.24 times less risky than HANOVER INSURANCE. It trades about 0.23 of its potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.03 per unit of risk. If you would invest 32.00 in BANK MANDIRI on November 2, 2024 and sell it today you would earn a total of 2.00 from holding BANK MANDIRI or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK MANDIRI vs. HANOVER INSURANCE
Performance |
| Timeline |
| BANK MANDIRI |
| HANOVER INSURANCE |
BANK MANDIRI and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK MANDIRI and HANOVER INSURANCE
The main advantage of trading using opposite BANK MANDIRI and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI 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.| BANK MANDIRI vs. GEELY AUTOMOBILE | BANK MANDIRI vs. Zoom Video Communications | BANK MANDIRI vs. Casio Computer CoLtd | BANK MANDIRI vs. Align Technology |
| HANOVER INSURANCE vs. Cars Inc | HANOVER INSURANCE vs. Carsales | HANOVER INSURANCE vs. GEELY AUTOMOBILE | HANOVER INSURANCE vs. Canadian Utilities Limited |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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