Correlation Between Zimmer Biomet and Hawesko Holding

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

Diversification Opportunities for Zimmer Biomet and Hawesko Holding

-0.69

Correlation Coefficient

Zimmer Biomet  Hawesko Holding

Excellent diversification

The 3 months correlation between Zimmer and Hawesko is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Zimmer Biomet Holdings and Hawesko Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawesko Holding 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 Hawesko Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawesko Holding AG has no effect on the direction of Zimmer Biomet i.e., Zimmer Biomet and Hawesko Holding go up and down completely randomly.

Pair Corralation between Zimmer Biomet and Hawesko Holding

Assuming the 90 days horizon Zimmer Biomet Holdings is expected to generate 0.51 times more return on investment than Hawesko Holding. However, Zimmer Biomet Holdings is 1.98 times less risky than Hawesko Holding. It trades about 0.08 of its potential returns per unit of risk. Hawesko Holding AG is currently generating about 0.01 per unit of risk. If you would invest  9,476  in Zimmer Biomet Holdings on September 22, 2024 and sell it today you would earn a total of  669.00  from holding Zimmer Biomet Holdings or generate 7.06% return on investment over 90 days.

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

Zimmer Biomet Holdings  vs.  Hawesko Holding AG

Zimmer Biomet Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zimmer Biomet Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Zimmer Biomet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hawesko Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawesko Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hawesko Holding is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Zimmer Biomet and Hawesko Holding

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

The idea behind Zimmer Biomet Holdings and Hawesko Holding 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.