Correlation Between Perusahaan Perseroan and Zimmer Biomet

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

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

Diversification Opportunities for Perusahaan Perseroan and Zimmer Biomet

-0.62

Correlation Coefficient

Perusahaan Perseroan  Zimmer Biomet

Excellent diversification

The 3 months correlation between Perusahaan and Zimmer is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perseroan PT 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 Perusahaan Perseroan 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 Perusahaan Perseroan PT 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 Perusahaan Perseroan i.e., Perusahaan Perseroan and Zimmer Biomet go up and down completely randomly.

Pair Corralation between Perusahaan Perseroan and Zimmer Biomet

Assuming the 90 days horizon Perusahaan Perseroan PT is expected to generate 1.93 times more return on investment than Zimmer Biomet. However, Perusahaan Perseroan is 1.93 times more volatile than Zimmer Biomet Holdings. It trades about -0.07 of its potential returns per unit of risk. Zimmer Biomet Holdings is currently generating about -0.18 per unit of risk. If you would invest  1,610  in Perusahaan Perseroan PT on October 9, 2024 and sell it today you would lose (50.00) from holding Perusahaan Perseroan PT or give up 3.11% of portfolio value over 90 days.

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

Perusahaan Perseroan PT  vs.  Zimmer Biomet Holdings

Perusahaan Perseroan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perusahaan Perseroan PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Perusahaan Perseroan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Perusahaan Perseroan and Zimmer Biomet

The main advantage of trading using opposite Perusahaan Perseroan and Zimmer Biomet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perusahaan Perseroan 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 Perusahaan Perseroan PT 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.