Correlation Between Bausch Health and ROYPHILIPS
Can any of the company-specific risk be diversified away by investing in both Bausch Health and ROYPHILIPS 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 ROYPHILIPS 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 ROYPHILIPS, you can compare the effects of market volatilities on Bausch Health and ROYPHILIPS 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 ROYPHILIPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and ROYPHILIPS.
Diversification Opportunities for Bausch Health and ROYPHILIPS
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bausch and ROYPHILIPS is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and ROYPHILIPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROYPHILIPS 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 ROYPHILIPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROYPHILIPS has no effect on the direction of Bausch Health i.e., Bausch Health and ROYPHILIPS go up and down completely randomly.
Pair Corralation between Bausch Health and ROYPHILIPS
Assuming the 90 days horizon Bausch Health Companies is expected to generate 1.62 times more return on investment than ROYPHILIPS. However, Bausch Health is 1.62 times more volatile than ROYPHILIPS. It trades about 0.18 of its potential returns per unit of risk. ROYPHILIPS is currently generating about -0.08 per unit of risk. If you would invest 572.00 in Bausch Health Companies on September 12, 2024 and sell it today you would earn a total of 221.00 from holding Bausch Health Companies or generate 38.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Bausch Health Companies vs. ROYPHILIPS
Performance |
| Timeline |
| Bausch Health Companies |
| ROYPHILIPS |
Bausch Health and ROYPHILIPS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and ROYPHILIPS
The main advantage of trading using opposite Bausch Health and ROYPHILIPS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, ROYPHILIPS 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 ROYPHILIPS will offset losses from the drop in ROYPHILIPS'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 |
| ROYPHILIPS vs. CVR Medical Corp | ROYPHILIPS vs. Bausch Health Companies | ROYPHILIPS vs. SCANDMEDICAL SOLDK 040 | ROYPHILIPS vs. Microbot Medical |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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