Correlation Between ZURICH INSURANCE and LOral SA

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

By analyzing existing cross correlation between ZURICH INSURANCE GROUP and LOral SA, you can compare the effects of market volatilities on ZURICH INSURANCE and LOral SA 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 ZURICH INSURANCE with a short position of LOral SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZURICH INSURANCE and LOral SA.

Diversification Opportunities for ZURICH INSURANCE and LOral SA

0.49

Correlation Coefficient

ZURICH INSURANCE  LOral SA

Very weak diversification

The 3 months correlation between ZURICH and LOral is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and LOral SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOral SA and ZURICH 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 ZURICH INSURANCE GROUP are associated (or correlated) with LOral SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOral SA has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and LOral SA go up and down completely randomly.

Pair Corralation between ZURICH INSURANCE and LOral SA

Assuming the 90 days trading horizon ZURICH INSURANCE GROUP is expected to generate 0.95 times more return on investment than LOral SA. However, ZURICH INSURANCE GROUP is 1.05 times less risky than LOral SA. It trades about 0.11 of its potential returns per unit of risk. LOral SA is currently generating about 0.06 per unit of risk. If you would invest  2,860  in ZURICH INSURANCE GROUP on December 21, 2024 and sell it today you would earn a total of  280.00  from holding ZURICH INSURANCE GROUP or generate 9.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

ZURICH INSURANCE GROUP  vs.  LOral SA

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 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ZURICH INSURANCE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

LOral SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LOral SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, LOral SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ZURICH INSURANCE and LOral SA

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

The idea behind ZURICH INSURANCE GROUP and LOral SA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.