Correlation Between Genertec Universal and Zurich Insurance

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

By analyzing existing cross correlation between Genertec Universal Medical and Zurich Insurance Group, you can compare the effects of market volatilities on Genertec Universal and Zurich Insurance 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 Genertec Universal with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genertec Universal and Zurich Insurance.

Diversification Opportunities for Genertec Universal and Zurich Insurance

0.3

Correlation Coefficient

Genertec Universal  Zurich Insurance

Weak diversification

The 3 months correlation between Genertec and Zurich is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Genertec Universal Medical and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Genertec Universal 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 Genertec Universal Medical are associated (or correlated) with Zurich Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Insurance has no effect on the direction of Genertec Universal i.e., Genertec Universal and Zurich Insurance go up and down completely randomly.

Pair Corralation between Genertec Universal and Zurich Insurance

Assuming the 90 days horizon Genertec Universal Medical is expected to generate 1.28 times more return on investment than Zurich Insurance. However, Genertec Universal is 1.28 times more volatile than Zurich Insurance Group. It trades about 0.06 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.02 per unit of risk. If you would invest  53.00  in Genertec Universal Medical on October 26, 2024 and sell it today you would earn a total of  4.00  from holding Genertec Universal Medical or generate 7.55% return on investment over 90 days.

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

Genertec Universal Medical  vs.  Zurich Insurance Group

Genertec Universal

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Genertec Universal Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Genertec Universal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Zurich Insurance

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Zurich Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Genertec Universal and Zurich Insurance

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

The idea behind Genertec Universal Medical and Zurich Insurance Group 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.