Correlation Between Bausch Health and Korn Ferry
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Korn Ferry 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 Korn Ferry 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 Korn Ferry, you can compare the effects of market volatilities on Bausch Health and Korn Ferry 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 Korn Ferry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Korn Ferry.
Diversification Opportunities for Bausch Health and Korn Ferry
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bausch and Korn is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Korn Ferry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korn Ferry 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 Korn Ferry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korn Ferry has no effect on the direction of Bausch Health i.e., Bausch Health and Korn Ferry go up and down completely randomly.
Pair Corralation between Bausch Health and Korn Ferry
Assuming the 90 days horizon Bausch Health Companies is expected to under-perform the Korn Ferry. But the stock apears to be less risky and, when comparing its historical volatility, Bausch Health Companies is 1.78 times less risky than Korn Ferry. The stock trades about -0.34 of its potential returns per unit of risk. The Korn Ferry is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6,450 in Korn Ferry on September 4, 2024 and sell it today you would earn a total of 750.00 from holding Korn Ferry or generate 11.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bausch Health Companies vs. Korn Ferry
Performance |
| Timeline |
| Bausch Health Companies |
| Korn Ferry |
Bausch Health and Korn Ferry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Korn Ferry
The main advantage of trading using opposite Bausch Health and Korn Ferry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Korn Ferry 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 Korn Ferry will offset losses from the drop in Korn Ferry's long position.The idea behind Bausch Health Companies and Korn Ferry pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Korn Ferry vs. FEMALE HEALTH | Korn Ferry vs. Diamondrock Hospitality Co | Korn Ferry vs. G III Apparel Group | Korn Ferry vs. Bausch Health Companies |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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