Correlation Between Asure Software and Bausch

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

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

Diversification Opportunities for Asure Software and Bausch

0.61

Correlation Coefficient

Asure Software  Bausch

Poor diversification

The 3 months correlation between Asure and Bausch is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Asure Software 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 Asure Software 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 Asure Software 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 Asure Software i.e., Asure Software and Bausch go up and down completely randomly.

Pair Corralation between Asure Software and Bausch

Given the investment horizon of 90 days Asure Software is expected to generate 1.26 times more return on investment than Bausch. However, Asure Software is 1.26 times more volatile than Bausch Health Companies. It trades about 0.29 of its potential returns per unit of risk. Bausch Health Companies is currently generating about -0.2 per unit of risk. If you would invest  902.00  in Asure Software on October 8, 2024 and sell it today you would earn a total of  98.00  from holding Asure Software or generate 10.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	73.68%
Values	Daily Returns

Asure Software  vs.  Bausch Health Companies

Asure Software

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asure Software are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Asure Software reported solid returns over the last few months and may actually be approaching a breakup point.

Bausch Health Companies

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Bausch is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Asure Software and Bausch

The main advantage of trading using opposite Asure Software and Bausch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asure Software 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 Asure Software 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.