Correlation Between Samsung Electronics and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics 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 Samsung Electronics and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and The Hanover Insurance, you can compare the effects of market volatilities on Samsung Electronics 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 Samsung Electronics with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Hanover Insurance.
Diversification Opportunities for Samsung Electronics and Hanover Insurance
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Hanover is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Samsung Electronics 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 Samsung Electronics Co 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 Samsung Electronics i.e., Samsung Electronics and Hanover Insurance go up and down completely randomly.
Pair Corralation between Samsung Electronics and Hanover Insurance
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Hanover Insurance. In addition to that, Samsung Electronics is 1.76 times more volatile than The Hanover Insurance. It trades about -0.02 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.41 per unit of volatility. If you would invest 13,500 in The Hanover Insurance on August 31, 2024 and sell it today you would earn a total of 2,300 from holding The Hanover Insurance or generate 17.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. The Hanover Insurance
Performance |
| Timeline |
| Samsung Electronics |
| Hanover Insurance |
Samsung Electronics and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Hanover Insurance
The main advantage of trading using opposite Samsung Electronics and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics 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.| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
| Hanover Insurance vs. Pentair plc | Hanover Insurance vs. AIR LIQUIDE ADR | Hanover Insurance vs. Norwegian Air Shuttle | Hanover Insurance vs. Computer And Technologies |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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