Correlation Between SCOR SE and Hannover

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

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

Diversification Opportunities for SCOR SE and Hannover

-0.34

Correlation Coefficient

SCOR SE  Hannover

Very good diversification

The 3 months correlation between SCOR and Hannover is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SCOR SE and Hannover Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannover Re and SCOR SE 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 SCOR SE 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 SCOR SE i.e., SCOR SE and Hannover go up and down completely randomly.

Pair Corralation between SCOR SE and Hannover

Assuming the 90 days horizon SCOR SE is expected to generate 1.19 times less return on investment than Hannover. In addition to that, SCOR SE is 2.23 times more volatile than Hannover Re. It trades about 0.03 of its total potential returns per unit of risk. Hannover Re is currently generating about 0.07 per unit of volatility. If you would invest  2,901  in Hannover Re on September 20, 2024 and sell it today you would earn a total of  1,488  from holding Hannover Re or generate 51.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	59.39%
Values	Daily Returns

SCOR SE  vs.  Hannover Re

SCOR SE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR SE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, SCOR SE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SCOR SE and Hannover

The main advantage of trading using opposite SCOR SE and Hannover positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR SE 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 SCOR SE 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..