Correlation Between Zurich Insurance and Nippon Telegraph

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

Diversification Opportunities for Zurich Insurance and Nippon Telegraph

0.52

Correlation Coefficient

Zurich Insurance  Nippon Telegraph

Very weak diversification

The 3 months correlation between Zurich and Nippon is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Nippon Telegraph and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Telegraph 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 Nippon Telegraph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Telegraph has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Nippon Telegraph go up and down completely randomly.

Pair Corralation between Zurich Insurance and Nippon Telegraph

If you would invest  3,017  in Zurich Insurance Group on September 19, 2024 and sell it today you would earn a total of  73.00  from holding Zurich Insurance Group or generate 2.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Zurich Insurance Group  vs.  Nippon Telegraph and

Zurich Insurance

Risk-Adjusted Performance

3 of 100

Modest

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.

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.

Pair Trading with Zurich Insurance and Nippon Telegraph

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

The idea behind Zurich Insurance Group and Nippon Telegraph and 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.