Correlation Between PICC Property and Hannover

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

By analyzing existing cross correlation between PICC Property and and Hannover Re, you can compare the effects of market volatilities on PICC Property and Hannover 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 PICC Property with a short position of Hannover. Check out your portfolio center. Please also check ongoing floating volatility patterns of PICC Property and Hannover.

Diversification Opportunities for PICC Property and Hannover

0.71

Correlation Coefficient

PICC Property  Hannover

Poor diversification

The 3 months correlation between PICC and Hannover is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding PICC Property and and Hannover Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannover Re and PICC Property 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 PICC Property and are associated (or correlated) with Hannover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannover Re has no effect on the direction of PICC Property i.e., PICC Property and Hannover go up and down completely randomly.

Pair Corralation between PICC Property and Hannover

Assuming the 90 days horizon PICC Property is expected to generate 1.08 times less return on investment than Hannover. In addition to that, PICC Property is 2.04 times more volatile than Hannover Re. It trades about 0.1 of its total potential returns per unit of risk. Hannover Re is currently generating about 0.21 per unit of volatility. If you would invest  4,176  in Hannover Re on December 29, 2024 and sell it today you would earn a total of  834.00  from holding Hannover Re or generate 19.97% return on investment over 90 days.

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

PICC Property and  vs.  Hannover Re

PICC Property

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PICC Property and are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, PICC Property showed solid returns over the last few months and may actually be approaching a breakup point.

Hannover Re

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hannover Re are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hannover showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PICC Property and Hannover

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

The idea behind PICC Property and and Hannover Re 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.