Correlation Between Hannover and Maiden Holdings

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

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

Diversification Opportunities for Hannover and Maiden Holdings

0.08

Correlation Coefficient

Hannover  Maiden Holdings

Significant diversification

The 3 months correlation between Hannover and Maiden is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hannover Re and Maiden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings and Hannover 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 Hannover Re are associated (or correlated) with Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings has no effect on the direction of Hannover i.e., Hannover and Maiden Holdings go up and down completely randomly.

Pair Corralation between Hannover and Maiden Holdings

Assuming the 90 days horizon Hannover Re is expected to under-perform the Maiden Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hannover Re is 3.13 times less risky than Maiden Holdings. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Maiden Holdings is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  149.00  in Maiden Holdings on September 19, 2024 and sell it today you would lose (14.00) from holding Maiden Holdings or give up 9.4% of portfolio value over 90 days.

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

Hannover Re  vs.  Maiden Holdings

Hannover Re

Risk-Adjusted Performance

0 of 100

Very Weak

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

Maiden Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maiden Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Maiden Holdings is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hannover and Maiden Holdings

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

The idea behind Hannover Re and Maiden 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.

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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 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..