Correlation Between Zimmer Biomet and Odyssey Group

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

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

Diversification Opportunities for Zimmer Biomet and Odyssey Group

-0.63

Correlation Coefficient

Zimmer Biomet  Odyssey Group

Excellent diversification

The 3 months correlation between Zimmer and Odyssey is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Zimmer Biomet Holdings and Odyssey Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssey Group Intern and Zimmer Biomet 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 Zimmer Biomet Holdings are associated (or correlated) with Odyssey Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssey Group Intern has no effect on the direction of Zimmer Biomet i.e., Zimmer Biomet and Odyssey Group go up and down completely randomly.

Pair Corralation between Zimmer Biomet and Odyssey Group

Considering the 90-day investment horizon Zimmer Biomet Holdings is expected to under-perform the Odyssey Group. But the stock apears to be less risky and, when comparing its historical volatility, Zimmer Biomet Holdings is 9.22 times less risky than Odyssey Group. The stock trades about -0.41 of its potential returns per unit of risk. The Odyssey Group International is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2.70  in Odyssey Group International on October 10, 2024 and sell it today you would lose (0.20) from holding Odyssey Group International or give up 7.41% of portfolio value over 90 days.

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

Zimmer Biomet Holdings  vs.  Odyssey Group International

Zimmer Biomet Holdings

Risk-Adjusted Performance

0 of 100

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.

Odyssey Group Intern

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Odyssey Group International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Odyssey Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zimmer Biomet and Odyssey Group

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

The idea behind Zimmer Biomet Holdings and Odyssey Group International 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.