Correlation Between Krystal Biotech and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Krystal Biotech 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 Krystal Biotech and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Krystal Biotech and Bausch Health Companies, you can compare the effects of market volatilities on Krystal Biotech 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 Krystal Biotech with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krystal Biotech and Bausch Health.
Diversification Opportunities for Krystal Biotech and Bausch Health
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Krystal and Bausch is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Krystal Biotech 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 Krystal Biotech 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 Krystal Biotech 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 Krystal Biotech i.e., Krystal Biotech and Bausch Health go up and down completely randomly.
Pair Corralation between Krystal Biotech and Bausch Health
Given the investment horizon of 90 days Krystal Biotech is expected to generate 12.55 times less return on investment than Bausch Health. But when comparing it to its historical volatility, Krystal Biotech is 1.3 times less risky than Bausch Health. It trades about 0.02 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 593.00 in Bausch Health Companies on August 30, 2024 and sell it today you would earn a total of 219.00 from holding Bausch Health Companies or generate 36.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krystal Biotech vs. Bausch Health Companies
Performance |
| Timeline |
| Krystal Biotech |
| Bausch Health Companies |
Krystal Biotech and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krystal Biotech and Bausch Health
The main advantage of trading using opposite Krystal Biotech and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krystal Biotech 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.| Krystal Biotech vs. MeiraGTx Holdings PLC | Krystal Biotech vs. Apellis Pharmaceuticals | Krystal Biotech vs. Regenxbio | Krystal Biotech vs. Rhythm Pharmaceuticals |
| Bausch Health vs. Emergent Biosolutions | Bausch Health vs. Neurocrine Biosciences | Bausch Health vs. Teva Pharma Industries | Bausch Health vs. Haleon plc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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