Correlation Between HCI and Tokio Marine

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

By analyzing existing cross correlation between HCI Group and Tokio Marine Holdings, you can compare the effects of market volatilities on HCI and Tokio Marine 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 HCI with a short position of Tokio Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCI and Tokio Marine.

Diversification Opportunities for HCI and Tokio Marine

0.0

Correlation Coefficient

HCI  Tokio Marine

Pay attention - limited upside

The 3 months correlation between HCI and Tokio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HCI Group and Tokio Marine Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokio Marine Holdings and HCI 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 HCI Group are associated (or correlated) with Tokio Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokio Marine Holdings has no effect on the direction of HCI i.e., HCI and Tokio Marine go up and down completely randomly.

Pair Corralation between HCI and Tokio Marine

If you would invest  11,807  in HCI Group on December 26, 2024 and sell it today you would earn a total of  2,240  from holding HCI Group or generate 18.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

HCI Group  vs.  Tokio Marine Holdings

HCI Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HCI Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental indicators, HCI demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Tokio Marine Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tokio Marine Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Tokio Marine is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HCI and Tokio Marine

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

The idea behind HCI Group and Tokio Marine Holdings 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..