Correlation Between Bausch Health and Eisai Co
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Eisai Co 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 Eisai Co 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 Eisai Co, you can compare the effects of market volatilities on Bausch Health and Eisai Co 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 Eisai Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Eisai Co.
Diversification Opportunities for Bausch Health and Eisai Co
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bausch and Eisai is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai Co 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 Eisai Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eisai Co has no effect on the direction of Bausch Health i.e., Bausch Health and Eisai Co go up and down completely randomly.
Pair Corralation between Bausch Health and Eisai Co
Assuming the 90 days horizon Bausch Health Companies is expected to generate 0.87 times more return on investment than Eisai Co. However, Bausch Health Companies is 1.15 times less risky than Eisai Co. It trades about 0.05 of its potential returns per unit of risk. Eisai Co is currently generating about 0.0 per unit of risk. If you would invest 745.00 in Bausch Health Companies on September 1, 2024 and sell it today you would earn a total of 18.00 from holding Bausch Health Companies or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bausch Health Companies vs. Eisai Co
Performance |
| Timeline |
| Bausch Health Companies |
| Eisai Co |
Bausch Health and Eisai Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Eisai Co
The main advantage of trading using opposite Bausch Health and Eisai Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Eisai Co 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 Eisai Co will offset losses from the drop in Eisai Co's long position.| Bausch Health vs. Eisai Co | Bausch Health vs. Shionogi Co | Bausch Health vs. Superior Plus Corp | Bausch Health vs. Origin Agritech |
| Eisai Co vs. Shionogi Co | Eisai Co vs. Superior Plus Corp | Eisai Co vs. Origin Agritech | Eisai Co vs. Identiv |
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 CEOs Directory module to screen CEOs from public companies around the world.
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