Correlation Between Zimmer Biomet and KOWORLD AG

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

Diversification Opportunities for Zimmer Biomet and KOWORLD AG

-0.44

Correlation Coefficient

Zimmer Biomet  KOWORLD AG

Very good diversification

The 3 months correlation between Zimmer and KOWORLD is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Zimmer Biomet Holdings and KOWORLD AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOWORLD AG 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 KOWORLD AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOWORLD AG has no effect on the direction of Zimmer Biomet i.e., Zimmer Biomet and KOWORLD AG go up and down completely randomly.

Pair Corralation between Zimmer Biomet and KOWORLD AG

Assuming the 90 days horizon Zimmer Biomet Holdings is expected to under-perform the KOWORLD AG. But the stock apears to be less risky and, when comparing its historical volatility, Zimmer Biomet Holdings is 2.19 times less risky than KOWORLD AG. The stock trades about -0.14 of its potential returns per unit of risk. The KOWORLD AG is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,810  in KOWORLD AG on September 28, 2024 and sell it today you would earn a total of  50.00  from holding KOWORLD AG or generate 1.78% 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.  KOWORLD AG

Zimmer Biomet Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zimmer Biomet Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

KOWORLD AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Zimmer Biomet and KOWORLD AG

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

The idea behind Zimmer Biomet Holdings and KOWORLD AG 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.