Correlation Between Zurich Insurance and ZhongAn Online

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Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and ZhongAn Online 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 ZhongAn Online 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 ZhongAn Online P, you can compare the effects of market volatilities on Zurich Insurance and ZhongAn Online 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 ZhongAn Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and ZhongAn Online.

Diversification Opportunities for Zurich Insurance and ZhongAn Online

ZurichZhongAnDiversified AwayZurichZhongAnDiversified Away100%
0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Zurich and ZhongAn is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and ZhongAn Online P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZhongAn Online P 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 ZhongAn Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZhongAn Online P has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and ZhongAn Online go up and down completely randomly.

Pair Corralation between Zurich Insurance and ZhongAn Online

Assuming the 90 days trading horizon Zurich Insurance is expected to generate 1.65 times less return on investment than ZhongAn Online. But when comparing it to its historical volatility, Zurich Insurance Group is 2.25 times less risky than ZhongAn Online. It trades about 0.06 of its potential returns per unit of risk. ZhongAn Online P is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  137.00  in ZhongAn Online P on November 21, 2024 and sell it today you would earn a total of  39.00  from holding ZhongAn Online P or generate 28.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Zurich Insurance Group  vs.  ZhongAn Online P

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-50510
JavaScript chart by amCharts 3.21.15ZFI1 1ZO
       Timeline  
Zurich Insurance 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 2 (%) 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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2828.52929.53030.5
ZhongAn Online P 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in ZhongAn Online P are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ZhongAn Online may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1.31.41.51.61.7

Zurich Insurance and ZhongAn Online Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.63-4.97-3.3-1.640.02871.723.445.166.88 0.020.030.040.050.060.070.08
JavaScript chart by amCharts 3.21.15ZFI1 1ZO
       Returns  

Pair Trading with Zurich Insurance and ZhongAn Online

The main advantage of trading using opposite Zurich Insurance and ZhongAn Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, ZhongAn Online 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 ZhongAn Online will offset losses from the drop in ZhongAn Online's long position.
The idea behind Zurich Insurance Group and ZhongAn Online P 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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