Correlation Between Cincinnati Financial and Hardide PLC

Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Hardide PLC 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 Cincinnati Financial and Hardide PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cincinnati Financial Corp and Hardide PLC, you can compare the effects of market volatilities on Cincinnati Financial and Hardide PLC 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 Cincinnati Financial with a short position of Hardide PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Hardide PLC.

Diversification Opportunities for Cincinnati Financial and Hardide PLC

-0.76

Correlation Coefficient

Cincinnati Financial  Hardide PLC

Pay attention - limited upside

The 3 months correlation between Cincinnati and Hardide is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Hardide PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hardide PLC and Cincinnati Financial 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 Cincinnati Financial Corp are associated (or correlated) with Hardide PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hardide PLC has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Hardide PLC go up and down completely randomly.

Pair Corralation between Cincinnati Financial and Hardide PLC

Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to under-perform the Hardide PLC. But the stock apears to be less risky and, when comparing its historical volatility, Cincinnati Financial Corp is 2.93 times less risky than Hardide PLC. The stock trades about -0.06 of its potential returns per unit of risk. The Hardide PLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  500.00  in Hardide PLC on December 1, 2024 and sell it today you would earn a total of  125.00  from holding Hardide PLC or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Cincinnati Financial Corp  vs.  Hardide PLC

Cincinnati Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cincinnati Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Hardide PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hardide PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Hardide PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cincinnati Financial and Hardide PLC

The main advantage of trading using opposite Cincinnati Financial and Hardide PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Hardide PLC 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 Hardide PLC will offset losses from the drop in Hardide PLC's long position.

The idea behind Cincinnati Financial Corp and Hardide PLC 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.