Correlation Between PT Bank and Zimmer Biomet

Can any of the company-specific risk be diversified away by investing in both PT Bank and Zimmer Biomet 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 PT Bank and Zimmer Biomet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Bank Rakyat and Zimmer Biomet Holdings, you can compare the effects of market volatilities on PT Bank and Zimmer Biomet 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 PT Bank with a short position of Zimmer Biomet. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Zimmer Biomet.

Diversification Opportunities for PT Bank and Zimmer Biomet

-0.56

Correlation Coefficient

PT Bank  Zimmer Biomet

Excellent diversification

The 3 months correlation between BYRA and Zimmer is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Zimmer Biomet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zimmer Biomet Holdings and PT Bank 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 PT Bank Rakyat are associated (or correlated) with Zimmer Biomet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zimmer Biomet Holdings has no effect on the direction of PT Bank i.e., PT Bank and Zimmer Biomet go up and down completely randomly.

Pair Corralation between PT Bank and Zimmer Biomet

Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the Zimmer Biomet. In addition to that, PT Bank is 6.69 times more volatile than Zimmer Biomet Holdings. It trades about -0.11 of its total potential returns per unit of risk. Zimmer Biomet Holdings is currently generating about -0.18 per unit of volatility. If you would invest  10,371  in Zimmer Biomet Holdings on October 9, 2024 and sell it today you would lose (396.00) from holding Zimmer Biomet Holdings or give up 3.82% of portfolio value over 90 days.

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

PT Bank Rakyat  vs.  Zimmer Biomet Holdings

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Zimmer Biomet Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zimmer Biomet Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Zimmer Biomet may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PT Bank and Zimmer Biomet

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

The idea behind PT Bank Rakyat and Zimmer Biomet Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.