Correlation Between Bausch Health and CRRC
Can any of the company-specific risk be diversified away by investing in both Bausch Health and CRRC 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 CRRC 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 CRRC Limited, you can compare the effects of market volatilities on Bausch Health and CRRC 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 CRRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and CRRC.
Diversification Opportunities for Bausch Health and CRRC
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bausch and CRRC is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and CRRC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRRC Limited 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 CRRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRRC Limited has no effect on the direction of Bausch Health i.e., Bausch Health and CRRC go up and down completely randomly.
Pair Corralation between Bausch Health and CRRC
Assuming the 90 days horizon Bausch Health is expected to generate 3.41 times less return on investment than CRRC. But when comparing it to its historical volatility, Bausch Health Companies is 1.23 times less risky than CRRC. It trades about 0.04 of its potential returns per unit of risk. CRRC Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 24.00 in CRRC Limited on September 14, 2024 and sell it today you would earn a total of 37.00 from holding CRRC Limited or generate 154.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Bausch Health Companies vs. CRRC Limited
Performance |
| Timeline |
| Bausch Health Companies |
| CRRC Limited |
Bausch Health and CRRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and CRRC
The main advantage of trading using opposite Bausch Health and CRRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, CRRC 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 CRRC will offset losses from the drop in CRRC's long position.| Bausch Health vs. Shionogi Co | Bausch Health vs. Dr Reddys Laboratories | Bausch Health vs. Superior Plus Corp | Bausch Health vs. NMI Holdings |
| CRRC vs. Datang International Power | CRRC vs. Pure Storage | CRRC vs. National Storage Affiliates | CRRC vs. Hochschild Mining plc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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