Correlation Between Bausch Health and HEMISPHERE EGY
Can any of the company-specific risk be diversified away by investing in both Bausch Health and HEMISPHERE EGY 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 HEMISPHERE EGY 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 HEMISPHERE EGY, you can compare the effects of market volatilities on Bausch Health and HEMISPHERE EGY 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 HEMISPHERE EGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and HEMISPHERE EGY.
Diversification Opportunities for Bausch Health and HEMISPHERE EGY
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bausch and HEMISPHERE is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and HEMISPHERE EGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEMISPHERE EGY 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 HEMISPHERE EGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEMISPHERE EGY has no effect on the direction of Bausch Health i.e., Bausch Health and HEMISPHERE EGY go up and down completely randomly.
Pair Corralation between Bausch Health and HEMISPHERE EGY
Assuming the 90 days horizon Bausch Health Companies is expected to under-perform the HEMISPHERE EGY. In addition to that, Bausch Health is 2.36 times more volatile than HEMISPHERE EGY. It trades about -0.05 of its total potential returns per unit of risk. HEMISPHERE EGY is currently generating about -0.06 per unit of volatility. If you would invest 120.00 in HEMISPHERE EGY on December 6, 2024 and sell it today you would lose (3.00) from holding HEMISPHERE EGY or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bausch Health Companies vs. HEMISPHERE EGY
Performance |
| Timeline |
| Bausch Health Companies |
| HEMISPHERE EGY |
Bausch Health and HEMISPHERE EGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and HEMISPHERE EGY
The main advantage of trading using opposite Bausch Health and HEMISPHERE EGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, HEMISPHERE EGY 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 HEMISPHERE EGY will offset losses from the drop in HEMISPHERE EGY's long position.| Bausch Health vs. United Overseas Insurance | Bausch Health vs. VARIOUS EATERIES LS | Bausch Health vs. Japan Post Insurance | Bausch Health vs. ZURICH INSURANCE GROUP |
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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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