Correlation Between Hanover Insurance and Seino Holdings

Can any of the company-specific risk be diversified away by investing in both Hanover Insurance and Seino Holdings 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 Seino Holdings 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 Seino Holdings Co, you can compare the effects of market volatilities on Hanover Insurance and Seino Holdings 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 Seino Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Insurance and Seino Holdings.

Diversification Opportunities for Hanover Insurance and Seino Holdings

0.42

Correlation Coefficient

Hanover Insurance  Seino Holdings

Very weak diversification

The 3 months correlation between Hanover and Seino is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Seino Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seino Holdings 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 Seino Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seino Holdings has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Seino Holdings go up and down completely randomly.

Pair Corralation between Hanover Insurance and Seino Holdings

Assuming the 90 days horizon The Hanover Insurance is expected to generate 1.08 times more return on investment than Seino Holdings. However, Hanover Insurance is 1.08 times more volatile than Seino Holdings Co. It trades about 0.17 of its potential returns per unit of risk. Seino Holdings Co is currently generating about 0.14 per unit of risk. If you would invest  11,126  in The Hanover Insurance on September 12, 2024 and sell it today you would earn a total of  3,874  from holding The Hanover Insurance or generate 34.82% return on investment over 90 days.

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

The Hanover Insurance  vs.  Seino Holdings Co

Hanover Insurance

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hanover Insurance are ranked lower than 13 (%) 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.

Seino Holdings

Risk-Adjusted Performance

1 of 100

Weak

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

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

The idea behind The Hanover Insurance and Seino Holdings Co 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..