Correlation Between Bausch Health and Alfa Financial
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Alfa Financial 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 Alfa Financial 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 Alfa Financial Software, you can compare the effects of market volatilities on Bausch Health and Alfa Financial 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 Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Alfa Financial.
Diversification Opportunities for Bausch Health and Alfa Financial
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bausch and Alfa is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software 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 Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of Bausch Health i.e., Bausch Health and Alfa Financial go up and down completely randomly.
Pair Corralation between Bausch Health and Alfa Financial
Assuming the 90 days horizon Bausch Health is expected to generate 1.61 times less return on investment than Alfa Financial. In addition to that, Bausch Health is 1.8 times more volatile than Alfa Financial Software. It trades about 0.03 of its total potential returns per unit of risk. Alfa Financial Software is currently generating about 0.1 per unit of volatility. If you would invest 164.00 in Alfa Financial Software on August 29, 2024 and sell it today you would earn a total of 88.00 from holding Alfa Financial Software or generate 53.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Alfa Financial Software
Performance |
| Timeline |
| Bausch Health Companies |
| Alfa Financial Software |
Bausch Health and Alfa Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Alfa Financial
The main advantage of trading using opposite Bausch Health and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Alfa Financial 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 Alfa Financial will offset losses from the drop in Alfa Financial's long position.| Bausch Health vs. Shionogi Co | Bausch Health vs. Ipsen SA | Bausch Health vs. Dr Reddys Laboratories | Bausch Health vs. Superior Plus Corp |
| Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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