Correlation Between Zimmer Biomet and Cellink AB

Can any of the company-specific risk be diversified away by investing in both Zimmer Biomet and Cellink AB 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 Cellink AB 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 Cellink AB, you can compare the effects of market volatilities on Zimmer Biomet and Cellink AB 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 Cellink AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zimmer Biomet and Cellink AB.

Diversification Opportunities for Zimmer Biomet and Cellink AB

-0.42

Correlation Coefficient

Zimmer Biomet  Cellink AB

Very good diversification

The 3 months correlation between Zimmer and Cellink is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Zimmer Biomet Holdings and Cellink AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellink AB 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 Cellink AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellink AB has no effect on the direction of Zimmer Biomet i.e., Zimmer Biomet and Cellink AB go up and down completely randomly.

Pair Corralation between Zimmer Biomet and Cellink AB

Assuming the 90 days horizon Zimmer Biomet is expected to generate 57.06 times less return on investment than Cellink AB. But when comparing it to its historical volatility, Zimmer Biomet Holdings is 2.44 times less risky than Cellink AB. It trades about 0.01 of its potential returns per unit of risk. Cellink AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  277.00  in Cellink AB on December 21, 2024 and sell it today you would earn a total of  75.00  from holding Cellink AB or generate 27.08% return on investment over 90 days.

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

Zimmer Biomet Holdings  vs.  Cellink AB

Zimmer Biomet Holdings

Risk-Adjusted Performance

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 nearly stable basic indicators, Zimmer Biomet is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Cellink AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cellink AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cellink AB reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zimmer Biomet and Cellink AB

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

The idea behind Zimmer Biomet Holdings and Cellink AB 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.