Correlation Between Bausch Health and Carmell Therapeutics
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Carmell Therapeutics 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 Carmell Therapeutics 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 Carmell Therapeutics, you can compare the effects of market volatilities on Bausch Health and Carmell Therapeutics 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 Carmell Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Carmell Therapeutics.
Diversification Opportunities for Bausch Health and Carmell Therapeutics
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bausch and Carmell is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Carmell Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmell Therapeutics 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 Carmell Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmell Therapeutics has no effect on the direction of Bausch Health i.e., Bausch Health and Carmell Therapeutics go up and down completely randomly.
Pair Corralation between Bausch Health and Carmell Therapeutics
Considering the 90-day investment horizon Bausch Health is expected to generate 33.06 times less return on investment than Carmell Therapeutics. But when comparing it to its historical volatility, Bausch Health Companies is 7.71 times less risky than Carmell Therapeutics. It trades about 0.03 of its potential returns per unit of risk. Carmell Therapeutics is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3.27 in Carmell Therapeutics on November 29, 2024 and sell it today you would earn a total of 0.43 from holding Carmell Therapeutics or generate 13.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.27% |
| Values | Daily Returns |
Bausch Health Companies vs. Carmell Therapeutics
Performance |
| Timeline |
| Bausch Health Companies |
| Carmell Therapeutics |
Bausch Health and Carmell Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Carmell Therapeutics
The main advantage of trading using opposite Bausch Health and Carmell Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Carmell Therapeutics 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 Carmell Therapeutics will offset losses from the drop in Carmell Therapeutics' long position.| Bausch Health vs. Viatris | Bausch Health vs. Tilray Inc | Bausch Health vs. Zoetis Inc | Bausch Health vs. Emergent Biosolutions |
| Carmell Therapeutics vs. Companhia Siderurgica Nacional | Carmell Therapeutics vs. Allegheny Technologies Incorporated | Carmell Therapeutics vs. Ternium SA ADR | Carmell Therapeutics vs. Titan International |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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