Correlation Between Plum Acquisition and Zimmer Energy

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

By analyzing existing cross correlation between Plum Acquisition I and Zimmer Energy Transition, you can compare the effects of market volatilities on Plum Acquisition and Zimmer Energy 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 Plum Acquisition with a short position of Zimmer Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plum Acquisition and Zimmer Energy.

Diversification Opportunities for Plum Acquisition and Zimmer Energy

-0.19

Correlation Coefficient

Plum Acquisition  Zimmer Energy

Good diversification

The 3 months correlation between Plum and Zimmer is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Plum Acquisition I and Zimmer Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zimmer Energy Transition and Plum Acquisition 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 Plum Acquisition I are associated (or correlated) with Zimmer Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zimmer Energy Transition has no effect on the direction of Plum Acquisition i.e., Plum Acquisition and Zimmer Energy go up and down completely randomly.

Pair Corralation between Plum Acquisition and Zimmer Energy

If you would invest  1,023  in Zimmer Energy Transition on September 20, 2024 and sell it today you would earn a total of  0.00  from holding Zimmer Energy Transition or generate 0.0% return on investment over 90 days.

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

Plum Acquisition I  vs.  Zimmer Energy Transition

Plum Acquisition I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plum Acquisition I has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Plum Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Zimmer Energy Transition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zimmer Energy Transition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Zimmer Energy 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 Plum Acquisition and Zimmer Energy

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

The idea behind Plum Acquisition I and Zimmer Energy Transition 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.