Correlation Between Bausch Health and Shionogi
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Shionogi 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 Shionogi 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 Shionogi Co, you can compare the effects of market volatilities on Bausch Health and Shionogi 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 Shionogi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Shionogi.
Diversification Opportunities for Bausch Health and Shionogi
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bausch and Shionogi is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Shionogi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi 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 Shionogi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shionogi has no effect on the direction of Bausch Health i.e., Bausch Health and Shionogi go up and down completely randomly.
Pair Corralation between Bausch Health and Shionogi
Assuming the 90 days horizon Bausch Health Companies is expected to generate 2.39 times more return on investment than Shionogi. However, Bausch Health is 2.39 times more volatile than Shionogi Co. It trades about 0.05 of its potential returns per unit of risk. Shionogi Co is currently generating about 0.08 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Shionogi Co
Performance |
| Timeline |
| Bausch Health Companies |
| Shionogi |
Bausch Health and Shionogi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Shionogi
The main advantage of trading using opposite Bausch Health and Shionogi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Shionogi 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 Shionogi will offset losses from the drop in Shionogi's long position.| Bausch Health vs. Eisai Co | Bausch Health vs. Shionogi Co | Bausch Health vs. Superior Plus Corp | Bausch Health vs. Origin Agritech |
| Shionogi vs. Eisai Co | Shionogi vs. Superior Plus Corp | Shionogi vs. Origin Agritech | Shionogi 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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