Correlation Between Hanover Insurance and Lipocine

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

Diversification Opportunities for Hanover Insurance and Lipocine

-0.52

Correlation Coefficient

Hanover Insurance  Lipocine

Excellent diversification

The 3 months correlation between Hanover and Lipocine is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding The Hanover Insurance and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine 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 Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of Hanover Insurance i.e., Hanover Insurance and Lipocine go up and down completely randomly.

Pair Corralation between Hanover Insurance and Lipocine

Considering the 90-day investment horizon The Hanover Insurance is expected to under-perform the Lipocine. But the stock apears to be less risky and, when comparing its historical volatility, The Hanover Insurance is 3.53 times less risky than Lipocine. The stock trades about -0.01 of its potential returns per unit of risk. The Lipocine is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  508.00  in Lipocine on October 15, 2024 and sell it today you would lose (19.00) from holding Lipocine or give up 3.74% of portfolio value over 90 days.

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

The Hanover Insurance  vs.  Lipocine

Hanover Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hanover Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Hanover Insurance is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Lipocine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lipocine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Lipocine is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hanover Insurance and Lipocine

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

The idea behind The Hanover Insurance and Lipocine 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.