Correlation Between ZURICH INSURANCE and PERENNIAL ENERGY

Can any of the company-specific risk be diversified away by investing in both ZURICH INSURANCE and PERENNIAL ENERGY 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 PERENNIAL ENERGY 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 PERENNIAL ENERGY HD 01, you can compare the effects of market volatilities on ZURICH INSURANCE and PERENNIAL ENERGY 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 PERENNIAL ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZURICH INSURANCE and PERENNIAL ENERGY.

Diversification Opportunities for ZURICH INSURANCE and PERENNIAL ENERGY

-0.05

Correlation Coefficient

ZURICH INSURANCE  PERENNIAL ENERGY

Good diversification

The 3 months correlation between ZURICH and PERENNIAL is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and PERENNIAL ENERGY HD 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PERENNIAL ENERGY 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 PERENNIAL ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PERENNIAL ENERGY has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and PERENNIAL ENERGY go up and down completely randomly.

Pair Corralation between ZURICH INSURANCE and PERENNIAL ENERGY

Assuming the 90 days trading horizon ZURICH INSURANCE GROUP is expected to generate 0.26 times more return on investment than PERENNIAL ENERGY. However, ZURICH INSURANCE GROUP is 3.87 times less risky than PERENNIAL ENERGY. It trades about -0.23 of its potential returns per unit of risk. PERENNIAL ENERGY HD 01 is currently generating about -0.32 per unit of risk. If you would invest  2,920  in ZURICH INSURANCE GROUP on September 24, 2024 and sell it today you would lose (100.00) from holding ZURICH INSURANCE GROUP or give up 3.42% of portfolio value over 90 days.

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

ZURICH INSURANCE GROUP  vs.  PERENNIAL ENERGY HD 01

ZURICH INSURANCE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ZURICH INSURANCE GROUP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ZURICH INSURANCE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

PERENNIAL ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PERENNIAL ENERGY HD 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ZURICH INSURANCE and PERENNIAL ENERGY

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

The idea behind ZURICH INSURANCE GROUP and PERENNIAL ENERGY HD 01 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.