Correlation Between Bausch Health and Ocumetics Technology
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Ocumetics Technology 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 Bausch Health and Ocumetics Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bausch Health Companies and Ocumetics Technology Corp, you can compare the effects of market volatilities on Bausch Health and Ocumetics Technology 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 Bausch Health with a short position of Ocumetics Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Ocumetics Technology.
Diversification Opportunities for Bausch Health and Ocumetics Technology
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bausch and Ocumetics is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Ocumetics Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocumetics Technology Corp and Bausch Health 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 Bausch Health Companies are associated (or correlated) with Ocumetics Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocumetics Technology Corp has no effect on the direction of Bausch Health i.e., Bausch Health and Ocumetics Technology go up and down completely randomly.
Pair Corralation between Bausch Health and Ocumetics Technology
Assuming the 90 days trading horizon Bausch Health Companies is expected to generate 0.87 times more return on investment than Ocumetics Technology. However, Bausch Health Companies is 1.14 times less risky than Ocumetics Technology. It trades about -0.1 of its potential returns per unit of risk. Ocumetics Technology Corp is currently generating about -0.31 per unit of risk. If you would invest 1,281 in Bausch Health Companies on September 1, 2024 and sell it today you would lose (86.00) from holding Bausch Health Companies or give up 6.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Ocumetics Technology Corp
Performance |
| Timeline |
| Bausch Health Companies |
| Ocumetics Technology Corp |
Bausch Health and Ocumetics Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Ocumetics Technology
The main advantage of trading using opposite Bausch Health and Ocumetics Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Ocumetics Technology 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 Ocumetics Technology will offset losses from the drop in Ocumetics Technology's long position.| Bausch Health vs. iShares Canadian HYBrid | Bausch Health vs. Altagas Cum Red | Bausch Health vs. European Residential Real | Bausch Health vs. iShares Fundamental Hedged |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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