Correlation Between Hanover Insurance and TMBThanachart Bank

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

By analyzing existing cross correlation between The Hanover Insurance and TMBThanachart Bank Public, you can compare the effects of market volatilities on Hanover Insurance and TMBThanachart Bank 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 TMBThanachart Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and TMBThanachart Bank.

Diversification Opportunities for Hanover Insurance and TMBThanachart Bank

-0.39

Correlation Coefficient

Hanover Insurance  TMBThanachart Bank

Very good diversification

The 3 months correlation between Hanover and TMBThanachart is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and TMBThanachart Bank Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMBThanachart Bank Public 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 The Hanover Insurance are associated (or correlated) with TMBThanachart Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMBThanachart Bank Public has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and TMBThanachart Bank go up and down completely randomly.

Pair Corralation between Hanover Insurance and TMBThanachart Bank

Assuming the 90 days horizon The Hanover Insurance is expected to generate 0.62 times more return on investment than TMBThanachart Bank. However, The Hanover Insurance is 1.61 times less risky than TMBThanachart Bank. It trades about 0.15 of its potential returns per unit of risk. TMBThanachart Bank Public is currently generating about 0.02 per unit of risk. If you would invest  13,019  in The Hanover Insurance on October 9, 2024 and sell it today you would earn a total of  1,681  from holding The Hanover Insurance or generate 12.91% return on investment over 90 days.

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

The Hanover Insurance  vs.  TMBThanachart Bank Public

Hanover Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hanover Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hanover Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

TMBThanachart Bank Public

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TMBThanachart Bank Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, TMBThanachart Bank 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 TMBThanachart Bank

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

The idea behind The Hanover Insurance and TMBThanachart Bank Public 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.