Correlation Between Advanced Medical and Zurich Insurance

Can any of the company-specific risk be diversified away by investing in both Advanced Medical and Zurich Insurance 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 Advanced Medical and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advanced Medical Solutions and Zurich Insurance Group, you can compare the effects of market volatilities on Advanced Medical and Zurich Insurance 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 Advanced Medical with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and Zurich Insurance.

Diversification Opportunities for Advanced Medical and Zurich Insurance

-0.35

Correlation Coefficient

Advanced Medical  Zurich Insurance

Very good diversification

The 3 months correlation between Advanced and Zurich is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Advanced Medical 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 Advanced Medical Solutions are associated (or correlated) with Zurich Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Insurance has no effect on the direction of Advanced Medical i.e., Advanced Medical and Zurich Insurance go up and down completely randomly.

Pair Corralation between Advanced Medical and Zurich Insurance

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to under-perform the Zurich Insurance. In addition to that, Advanced Medical is 4.07 times more volatile than Zurich Insurance Group. It trades about -0.08 of its total potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.12 per unit of volatility. If you would invest  51,060  in Zurich Insurance Group on September 21, 2024 and sell it today you would earn a total of  2,900  from holding Zurich Insurance Group or generate 5.68% return on investment over 90 days.

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

Advanced Medical Solutions  vs.  Zurich Insurance Group

Advanced Medical Sol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Medical Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Zurich Insurance

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 9 (%) 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.

Pair Trading with Advanced Medical and Zurich Insurance

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

The idea behind Advanced Medical Solutions and Zurich Insurance 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.