Correlation Between HANOVER INSURANCE and Semperit Aktiengesellscha

Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and Semperit Aktiengesellscha 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 HANOVER INSURANCE and Semperit Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HANOVER INSURANCE and Semperit Aktiengesellschaft Holding, you can compare the effects of market volatilities on HANOVER INSURANCE and Semperit Aktiengesellscha 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 HANOVER INSURANCE with a short position of Semperit Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and Semperit Aktiengesellscha.

Diversification Opportunities for HANOVER INSURANCE and Semperit Aktiengesellscha

0.14

Correlation Coefficient

HANOVER INSURANCE  Semperit Aktiengesellscha

Average diversification

The 3 months correlation between HANOVER and Semperit is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and Semperit Aktiengesellschaft Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semperit Aktiengesellscha and HANOVER INSURANCE 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 HANOVER INSURANCE are associated (or correlated) with Semperit Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semperit Aktiengesellscha has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and Semperit Aktiengesellscha go up and down completely randomly.

Pair Corralation between HANOVER INSURANCE and Semperit Aktiengesellscha

Assuming the 90 days trading horizon HANOVER INSURANCE is expected to under-perform the Semperit Aktiengesellscha. In addition to that, HANOVER INSURANCE is 1.08 times more volatile than Semperit Aktiengesellschaft Holding. It trades about -0.1 of its total potential returns per unit of risk. Semperit Aktiengesellschaft Holding is currently generating about 0.3 per unit of volatility. If you would invest  1,162  in Semperit Aktiengesellschaft Holding on October 9, 2024 and sell it today you would earn a total of  64.00  from holding Semperit Aktiengesellschaft Holding or generate 5.51% return on investment over 90 days.

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

HANOVER INSURANCE  vs.  Semperit Aktiengesellschaft Ho

HANOVER INSURANCE

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HANOVER INSURANCE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, HANOVER INSURANCE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Semperit Aktiengesellscha

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Semperit Aktiengesellschaft Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Semperit Aktiengesellscha is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HANOVER INSURANCE and Semperit Aktiengesellscha

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

The idea behind HANOVER INSURANCE and Semperit Aktiengesellschaft Holding 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.