Correlation Between Nippon Telegraph and Zurich Insurance

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

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

Diversification Opportunities for Nippon Telegraph and Zurich Insurance

0.52

Correlation Coefficient

Nippon Telegraph  Zurich Insurance

Very weak diversification

The 3 months correlation between Nippon and Zurich is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Telegraph and and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Nippon Telegraph 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 Nippon Telegraph and 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 Nippon Telegraph i.e., Nippon Telegraph and Zurich Insurance go up and down completely randomly.

Pair Corralation between Nippon Telegraph and Zurich Insurance

If you would invest  2,236  in Zurich Insurance Group on September 19, 2024 and sell it today you would earn a total of  854.00  from holding Zurich Insurance Group or generate 38.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.35%
Values	Daily Returns

Nippon Telegraph and  vs.  Zurich Insurance Group

Nippon Telegraph

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nippon Telegraph and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Nippon Telegraph is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Zurich Insurance

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Zurich Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nippon Telegraph and Zurich Insurance

The main advantage of trading using opposite Nippon Telegraph and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Telegraph 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 Nippon Telegraph and 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.