Correlation Between ZURICH INSURANCE and China Railway
Can any of the company-specific risk be diversified away by investing in both ZURICH INSURANCE and China Railway 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 China Railway 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 China Railway Construction, you can compare the effects of market volatilities on ZURICH INSURANCE and China Railway 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 China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZURICH INSURANCE and China Railway.
Diversification Opportunities for ZURICH INSURANCE and China Railway
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ZURICH and China is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and China Railway Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Constr 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 China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Constr has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and China Railway go up and down completely randomly.
Pair Corralation between ZURICH INSURANCE and China Railway
Assuming the 90 days trading horizon ZURICH INSURANCE is expected to generate 5.57 times less return on investment than China Railway. But when comparing it to its historical volatility, ZURICH INSURANCE GROUP is 2.96 times less risky than China Railway. It trades about 0.07 of its potential returns per unit of risk. China Railway Construction is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 49.00 in China Railway Construction on October 18, 2024 and sell it today you would earn a total of 15.00 from holding China Railway Construction or generate 30.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.77% |
| Values | Daily Returns |
ZURICH INSURANCE GROUP vs. China Railway Construction
Performance |
| Timeline |
| ZURICH INSURANCE |
| China Railway Constr |
ZURICH INSURANCE and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZURICH INSURANCE and China Railway
The main advantage of trading using opposite ZURICH INSURANCE and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZURICH INSURANCE position performs unexpectedly, China Railway 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 China Railway will offset losses from the drop in China Railway's long position.| ZURICH INSURANCE vs. INDOFOOD AGRI RES | ZURICH INSURANCE vs. Canadian Utilities Limited | ZURICH INSURANCE vs. Sunny Optical Technology | ZURICH INSURANCE vs. X FAB Silicon Foundries |
| China Railway vs. TYSON FOODS A | China Railway vs. ZURICH INSURANCE GROUP | China Railway vs. United Natural Foods | China Railway vs. SENECA FOODS A |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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