Correlation Between Cymbria and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Cymbria 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 Cymbria and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cymbria and Bausch Health Companies, you can compare the effects of market volatilities on Cymbria 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 Cymbria with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cymbria and Bausch Health.
Diversification Opportunities for Cymbria and Bausch Health
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cymbria and Bausch is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cymbria 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 Cymbria 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 Cymbria 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 Cymbria i.e., Cymbria and Bausch Health go up and down completely randomly.
Pair Corralation between Cymbria and Bausch Health
Assuming the 90 days trading horizon Cymbria is expected to generate 5.55 times less return on investment than Bausch Health. But when comparing it to its historical volatility, Cymbria is 3.64 times less risky than Bausch Health. It trades about 0.04 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,137 in Bausch Health Companies on August 31, 2024 and sell it today you would earn a total of 48.00 from holding Bausch Health Companies or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cymbria vs. Bausch Health Companies
Performance |
| Timeline |
| Cymbria |
| Bausch Health Companies |
Cymbria and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cymbria and Bausch Health
The main advantage of trading using opposite Cymbria and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cymbria 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.| Cymbria vs. Clairvest Group | Cymbria vs. Uniteds Limited | Cymbria vs. E L Financial Corp | Cymbria vs. Senvest Capital |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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