Correlation Between Pulmonx Corp and Zimmer Biomet

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

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

Diversification Opportunities for Pulmonx Corp and Zimmer Biomet

0.04

Correlation Coefficient

Pulmonx Corp  Zimmer Biomet

Significant diversification

The 3 months correlation between Pulmonx and Zimmer is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Pulmonx Corp 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 Pulmonx Corp 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 Pulmonx Corp 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 Pulmonx Corp i.e., Pulmonx Corp and Zimmer Biomet go up and down completely randomly.

Pair Corralation between Pulmonx Corp and Zimmer Biomet

Given the investment horizon of 90 days Pulmonx Corp is expected to under-perform the Zimmer Biomet. In addition to that, Pulmonx Corp is 2.62 times more volatile than Zimmer Biomet Holdings. It trades about -0.02 of its total potential returns per unit of risk. Zimmer Biomet Holdings is currently generating about -0.02 per unit of volatility. If you would invest  11,520  in Zimmer Biomet Holdings on August 30, 2024 and sell it today you would lose (318.00) from holding Zimmer Biomet Holdings or give up 2.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Pulmonx Corp  vs.  Zimmer Biomet Holdings

Pulmonx Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pulmonx Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Zimmer Biomet Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zimmer Biomet Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Zimmer Biomet is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Pulmonx Corp and Zimmer Biomet

The main advantage of trading using opposite Pulmonx Corp and Zimmer Biomet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pulmonx Corp 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 Pulmonx Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.