Correlation Between ZURICH INSURANCE and SHIN-ETSU CHEMICAL
Can any of the company-specific risk be diversified away by investing in both ZURICH INSURANCE and SHIN-ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL 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 SHIN ETSU CHEMICAL, you can compare the effects of market volatilities on ZURICH INSURANCE and SHIN-ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZURICH INSURANCE and SHIN-ETSU CHEMICAL.
Diversification Opportunities for ZURICH INSURANCE and SHIN-ETSU CHEMICAL
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ZURICH and SHIN-ETSU is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and SHIN ETSU CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIN ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIN ETSU CHEMICAL has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and SHIN-ETSU CHEMICAL go up and down completely randomly.
Pair Corralation between ZURICH INSURANCE and SHIN-ETSU CHEMICAL
Assuming the 90 days trading horizon ZURICH INSURANCE GROUP is expected to generate 0.61 times more return on investment than SHIN-ETSU CHEMICAL. However, ZURICH INSURANCE GROUP is 1.64 times less risky than SHIN-ETSU CHEMICAL. It trades about 0.28 of its potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about -0.02 per unit of risk. If you would invest 2,720 in ZURICH INSURANCE GROUP on August 26, 2024 and sell it today you would earn a total of 200.00 from holding ZURICH INSURANCE GROUP or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZURICH INSURANCE GROUP vs. SHIN ETSU CHEMICAL
Performance |
| Timeline |
| ZURICH INSURANCE |
| SHIN ETSU CHEMICAL |
ZURICH INSURANCE and SHIN-ETSU CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZURICH INSURANCE and SHIN-ETSU CHEMICAL
The main advantage of trading using opposite ZURICH INSURANCE and SHIN-ETSU CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZURICH INSURANCE position performs unexpectedly, SHIN-ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL will offset losses from the drop in SHIN-ETSU CHEMICAL's long position.| ZURICH INSURANCE vs. Apple Inc | ZURICH INSURANCE vs. Apple Inc | ZURICH INSURANCE vs. Apple Inc | ZURICH INSURANCE vs. Apple Inc |
| SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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