Correlation Between Zurich Insurance and PPHE Hotel

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

Diversification Opportunities for Zurich Insurance and PPHE Hotel

0.13

Correlation Coefficient

Zurich Insurance  PPHE Hotel

Average diversification

The 3 months correlation between Zurich and PPHE is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and PPHE Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE Hotel Group 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 PPHE Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE Hotel Group has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and PPHE Hotel go up and down completely randomly.

Pair Corralation between Zurich Insurance and PPHE Hotel

Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 0.55 times more return on investment than PPHE Hotel. However, Zurich Insurance Group is 1.82 times less risky than PPHE Hotel. It trades about 0.1 of its potential returns per unit of risk. PPHE Hotel Group is currently generating about 0.04 per unit of risk. If you would invest  44,579  in Zurich Insurance Group on September 13, 2024 and sell it today you would earn a total of  10,491  from holding Zurich Insurance Group or generate 23.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Zurich Insurance Group  vs.  PPHE Hotel Group

Zurich Insurance

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Zurich Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PPHE Hotel Group

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE Hotel Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, PPHE Hotel is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Zurich Insurance and PPHE Hotel

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

The idea behind Zurich Insurance Group and PPHE Hotel Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.