Correlation Between Straumann Holding and Carl Zeiss

Can any of the company-specific risk be diversified away by investing in both Straumann Holding and Carl Zeiss 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 Straumann Holding and Carl Zeiss into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Straumann Holding AG and Carl Zeiss Meditec, you can compare the effects of market volatilities on Straumann Holding and Carl Zeiss 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 Straumann Holding with a short position of Carl Zeiss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Straumann Holding and Carl Zeiss.

Diversification Opportunities for Straumann Holding and Carl Zeiss

0.08

Correlation Coefficient

Straumann Holding  Carl Zeiss

Significant diversification

The 3 months correlation between Straumann and Carl is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Straumann Holding AG and Carl Zeiss Meditec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carl Zeiss Meditec and Straumann Holding 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 Straumann Holding AG are associated (or correlated) with Carl Zeiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carl Zeiss Meditec has no effect on the direction of Straumann Holding i.e., Straumann Holding and Carl Zeiss go up and down completely randomly.

Pair Corralation between Straumann Holding and Carl Zeiss

Assuming the 90 days horizon Straumann Holding AG is expected to under-perform the Carl Zeiss. But the pink sheet apears to be less risky and, when comparing its historical volatility, Straumann Holding AG is 1.86 times less risky than Carl Zeiss. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Carl Zeiss Meditec is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4,810  in Carl Zeiss Meditec on December 29, 2024 and sell it today you would earn a total of  2,063  from holding Carl Zeiss Meditec or generate 42.89% return on investment over 90 days.

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

Straumann Holding AG  vs.  Carl Zeiss Meditec

Straumann Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Straumann Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Straumann Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Carl Zeiss Meditec

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carl Zeiss Meditec are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Carl Zeiss reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Straumann Holding and Carl Zeiss

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

The idea behind Straumann Holding AG and Carl Zeiss Meditec 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.