Correlation Between GREENX METALS and Hanover Insurance

Can any of the company-specific risk be diversified away by investing in both GREENX METALS 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 GREENX METALS and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GREENX METALS LTD and The Hanover Insurance, you can compare the effects of market volatilities on GREENX METALS 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 GREENX METALS with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREENX METALS and Hanover Insurance.

Diversification Opportunities for GREENX METALS and Hanover Insurance

0.01

Correlation Coefficient

GREENX METALS  Hanover Insurance

Significant diversification

The 3 months correlation between GREENX and Hanover is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding GREENX METALS LTD and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and GREENX METALS 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 GREENX METALS LTD 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 GREENX METALS i.e., GREENX METALS and Hanover Insurance go up and down completely randomly.

Pair Corralation between GREENX METALS and Hanover Insurance

Assuming the 90 days trading horizon GREENX METALS LTD is expected to generate 1.99 times more return on investment than Hanover Insurance. However, GREENX METALS is 1.99 times more volatile than The Hanover Insurance. It trades about 0.11 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.09 per unit of risk. If you would invest  40.00  in GREENX METALS LTD on December 22, 2024 and sell it today you would earn a total of  10.00  from holding GREENX METALS LTD or generate 25.0% return on investment over 90 days.

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

GREENX METALS LTD  vs.  The Hanover Insurance

GREENX METALS LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GREENX METALS LTD are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady primary indicators, GREENX METALS reported solid returns over the last few months and may actually be approaching a breakup point.

Hanover Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Hanover Insurance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hanover Insurance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GREENX METALS and Hanover Insurance

The main advantage of trading using opposite GREENX METALS and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GREENX METALS 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.

The idea behind GREENX METALS LTD and The Hanover Insurance 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.