Correlation Between Ping An and Zurich Insurance

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

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

Diversification Opportunities for Ping An and Zurich Insurance

0.67

Correlation Coefficient

Ping An  Zurich Insurance

Poor diversification

The 3 months correlation between Ping and Zurich is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Ping An 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 Ping An Insurance 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 Ping An i.e., Ping An and Zurich Insurance go up and down completely randomly.

Pair Corralation between Ping An and Zurich Insurance

Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Zurich Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Ping An Insurance is 1.16 times less risky than Zurich Insurance. The stock trades about 0.0 of its potential returns per unit of risk. The Zurich Insurance Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,800  in Zurich Insurance Group on December 28, 2024 and sell it today you would earn a total of  400.00  from holding Zurich Insurance Group or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Ping An Insurance  vs.  Zurich Insurance Group

Ping An Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ping An Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ping An is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Zurich Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Zurich Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ping An and Zurich Insurance

The main advantage of trading using opposite Ping An and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An 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 Ping An Insurance 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..