Correlation Between HANNRUECKVSE ADR and China Reinsurance

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

By analyzing existing cross correlation between HANNRUECKVSE ADR 12ON and China Reinsurance, you can compare the effects of market volatilities on HANNRUECKVSE ADR and China Reinsurance 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 HANNRUECKVSE ADR with a short position of China Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANNRUECKVSE ADR and China Reinsurance.

Diversification Opportunities for HANNRUECKVSE ADR and China Reinsurance

0.47

Correlation Coefficient

HANNRUECKVSE ADR  China Reinsurance

Very weak diversification

The 3 months correlation between HANNRUECKVSE and China is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding HANNRUECKVSE ADR 12ON and China Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Reinsurance and HANNRUECKVSE ADR 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 HANNRUECKVSE ADR 12ON are associated (or correlated) with China Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Reinsurance has no effect on the direction of HANNRUECKVSE ADR i.e., HANNRUECKVSE ADR and China Reinsurance go up and down completely randomly.

Pair Corralation between HANNRUECKVSE ADR and China Reinsurance

Assuming the 90 days trading horizon HANNRUECKVSE ADR is expected to generate 2.41 times less return on investment than China Reinsurance. But when comparing it to its historical volatility, HANNRUECKVSE ADR 12ON is 4.77 times less risky than China Reinsurance. It trades about 0.15 of its potential returns per unit of risk. China Reinsurance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10.00  in China Reinsurance on December 30, 2024 and sell it today you would earn a total of  2.00  from holding China Reinsurance or generate 20.0% return on investment over 90 days.

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

HANNRUECKVSE ADR 12ON  vs.  China Reinsurance

HANNRUECKVSE ADR 12ON

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HANNRUECKVSE ADR 12ON are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, HANNRUECKVSE ADR reported solid returns over the last few months and may actually be approaching a breakup point.

China Reinsurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Reinsurance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, China Reinsurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HANNRUECKVSE ADR and China Reinsurance

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

The idea behind HANNRUECKVSE ADR 12ON and China Reinsurance 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.