Correlation Between Bausch Health and NISSAN CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Bausch Health and NISSAN CHEMICAL 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 NISSAN CHEMICAL 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 NISSAN CHEMICAL IND, you can compare the effects of market volatilities on Bausch Health and NISSAN CHEMICAL 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 NISSAN CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and NISSAN CHEMICAL.
Diversification Opportunities for Bausch Health and NISSAN CHEMICAL
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bausch and NISSAN is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and NISSAN CHEMICAL IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSAN CHEMICAL IND 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 NISSAN CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSAN CHEMICAL IND has no effect on the direction of Bausch Health i.e., Bausch Health and NISSAN CHEMICAL go up and down completely randomly.
Pair Corralation between Bausch Health and NISSAN CHEMICAL
Assuming the 90 days horizon Bausch Health Companies is expected to generate 2.2 times more return on investment than NISSAN CHEMICAL. However, Bausch Health is 2.2 times more volatile than NISSAN CHEMICAL IND. It trades about 0.09 of its potential returns per unit of risk. NISSAN CHEMICAL IND is currently generating about 0.09 per unit of risk. If you would invest 563.00 in Bausch Health Companies on September 3, 2024 and sell it today you would earn a total of 220.00 from holding Bausch Health Companies or generate 39.08% 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. NISSAN CHEMICAL IND
Performance |
| Timeline |
| Bausch Health Companies |
| NISSAN CHEMICAL IND |
Bausch Health and NISSAN CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and NISSAN CHEMICAL
The main advantage of trading using opposite Bausch Health and NISSAN CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, NISSAN CHEMICAL 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 NISSAN CHEMICAL will offset losses from the drop in NISSAN CHEMICAL's long position.The idea behind Bausch Health Companies and NISSAN CHEMICAL IND 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.| NISSAN CHEMICAL vs. TOTAL GABON | NISSAN CHEMICAL vs. Walgreens Boots Alliance | NISSAN CHEMICAL vs. Peak Resources Limited |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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