Correlation Between SCOR PK and Hannover Rck
Can any of the company-specific risk be diversified away by investing in both SCOR PK and Hannover Rck 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 SCOR PK and Hannover Rck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR PK and Hannover Rck SE, you can compare the effects of market volatilities on SCOR PK and Hannover Rck 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 SCOR PK with a short position of Hannover Rck. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Hannover Rck.
Diversification Opportunities for SCOR PK and Hannover Rck
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCOR and Hannover is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Hannover Rck SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannover Rck SE and SCOR PK 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 SCOR PK are associated (or correlated) with Hannover Rck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannover Rck SE has no effect on the direction of SCOR PK i.e., SCOR PK and Hannover Rck go up and down completely randomly.
Pair Corralation between SCOR PK and Hannover Rck
Assuming the 90 days horizon SCOR PK is expected to under-perform the Hannover Rck. In addition to that, SCOR PK is 1.03 times more volatile than Hannover Rck SE. It trades about -0.22 of its total potential returns per unit of risk. Hannover Rck SE is currently generating about 0.1 per unit of volatility. If you would invest 25,522 in Hannover Rck SE on September 19, 2024 and sell it today you would earn a total of 783.00 from holding Hannover Rck SE or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SCOR PK vs. Hannover Rck SE
Performance |
| Timeline |
| SCOR PK |
| Hannover Rck SE |
SCOR PK and Hannover Rck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOR PK and Hannover Rck
The main advantage of trading using opposite SCOR PK and Hannover Rck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK position performs unexpectedly, Hannover Rck 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 Hannover Rck will offset losses from the drop in Hannover Rck's long position.The idea behind SCOR PK and Hannover Rck SE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hannover Rck vs. Swiss Re | Hannover Rck vs. Hannover Re | Hannover Rck vs. SCOR PK | Hannover Rck vs. SiriusPoint |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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