Correlation Between Aquestive Therapeutics and Bausch

Can any of the company-specific risk be diversified away by investing in both Aquestive Therapeutics and Bausch 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 Aquestive Therapeutics and Bausch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquestive Therapeutics and Bausch Health Companies, you can compare the effects of market volatilities on Aquestive Therapeutics and Bausch 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 Aquestive Therapeutics with a short position of Bausch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquestive Therapeutics and Bausch.

Diversification Opportunities for Aquestive Therapeutics and Bausch

-0.42

Correlation Coefficient

Aquestive Therapeutics  Bausch

Very good diversification

The 3 months correlation between Aquestive and Bausch is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Aquestive Therapeutics 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 Aquestive Therapeutics 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 Aquestive Therapeutics are associated (or correlated) with Bausch. 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 Aquestive Therapeutics i.e., Aquestive Therapeutics and Bausch go up and down completely randomly.

Pair Corralation between Aquestive Therapeutics and Bausch

Given the investment horizon of 90 days Aquestive Therapeutics is expected to generate 0.35 times more return on investment than Bausch. However, Aquestive Therapeutics is 2.84 times less risky than Bausch. It trades about -0.01 of its potential returns per unit of risk. Bausch Health Companies is currently generating about -0.01 per unit of risk. If you would invest  352.00  in Aquestive Therapeutics on December 24, 2024 and sell it today you would lose (27.00) from holding Aquestive Therapeutics or give up 7.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	75.41%
Values	Daily Returns

Aquestive Therapeutics  vs.  Bausch Health Companies

Aquestive Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquestive Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aquestive Therapeutics is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Bausch Health Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bausch Health Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Bausch Health Companies investors.

Pair Trading with Aquestive Therapeutics and Bausch

The main advantage of trading using opposite Aquestive Therapeutics and Bausch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquestive Therapeutics position performs unexpectedly, Bausch 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 will offset losses from the drop in Bausch's long position.

The idea behind Aquestive Therapeutics 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.