Correlation Between Cronos and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Cronos and Bausch Health 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 Cronos and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cronos Group and Bausch Health Companies, you can compare the effects of market volatilities on Cronos and Bausch Health 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 Cronos with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cronos and Bausch Health.
Diversification Opportunities for Cronos and Bausch Health
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cronos and Bausch is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cronos Group and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health Companies and Cronos 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 Cronos Group are associated (or correlated) with Bausch Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of Cronos i.e., Cronos and Bausch Health go up and down completely randomly.
Pair Corralation between Cronos and Bausch Health
Given the investment horizon of 90 days Cronos is expected to generate 2.59 times less return on investment than Bausch Health. In addition to that, Cronos is 1.09 times more volatile than Bausch Health Companies. It trades about 0.0 of its total potential returns per unit of risk. Bausch Health Companies is currently generating about 0.01 per unit of volatility. If you would invest 817.00 in Bausch Health Companies on August 31, 2024 and sell it today you would lose (5.00) from holding Bausch Health Companies or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cronos Group vs. Bausch Health Companies
Performance |
| Timeline |
| Cronos Group |
| Bausch Health Companies |
Cronos and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cronos and Bausch Health
The main advantage of trading using opposite Cronos and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cronos position performs unexpectedly, Bausch Health 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 Bausch Health will offset losses from the drop in Bausch Health's long position.The idea behind Cronos Group and Bausch Health Companies 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.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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |