Correlation Between Bausch Health and HUTCHMED DRC
Can any of the company-specific risk be diversified away by investing in both Bausch Health and HUTCHMED DRC 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 HUTCHMED DRC 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 HUTCHMED DRC, you can compare the effects of market volatilities on Bausch Health and HUTCHMED DRC 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 HUTCHMED DRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and HUTCHMED DRC.
Diversification Opportunities for Bausch Health and HUTCHMED DRC
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bausch and HUTCHMED is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and HUTCHMED DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHMED DRC 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 HUTCHMED DRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUTCHMED DRC has no effect on the direction of Bausch Health i.e., Bausch Health and HUTCHMED DRC go up and down completely randomly.
Pair Corralation between Bausch Health and HUTCHMED DRC
Considering the 90-day investment horizon Bausch Health is expected to generate 3.69 times less return on investment than HUTCHMED DRC. But when comparing it to its historical volatility, Bausch Health Companies is 1.21 times less risky than HUTCHMED DRC. It trades about 0.01 of its potential returns per unit of risk. HUTCHMED DRC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,485 in HUTCHMED DRC on August 27, 2024 and sell it today you would earn a total of 251.00 from holding HUTCHMED DRC or generate 16.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. HUTCHMED DRC
Performance |
| Timeline |
| Bausch Health Companies |
| HUTCHMED DRC |
Bausch Health and HUTCHMED DRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and HUTCHMED DRC
The main advantage of trading using opposite Bausch Health and HUTCHMED DRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, HUTCHMED DRC 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 HUTCHMED DRC will offset losses from the drop in HUTCHMED DRC's long position.| Bausch Health vs. Viatris | Bausch Health vs. Catalent | Bausch Health vs. Tilray Inc | Bausch Health vs. Zoetis Inc |
| HUTCHMED DRC vs. Capricor Therapeutics | HUTCHMED DRC vs. Soleno Therapeutics | HUTCHMED DRC vs. Bio Path Holdings | HUTCHMED DRC vs. Moleculin Biotech |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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