Correlation Between Bausch Health and XXIX Metal

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

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

Diversification Opportunities for Bausch Health and XXIX Metal

0.29

Correlation Coefficient

Bausch Health  XXIX Metal

Modest diversification

The 3 months correlation between Bausch and XXIX is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and XXIX Metal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XXIX Metal Corp and Bausch Health 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 Bausch Health Companies are associated (or correlated) with XXIX Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XXIX Metal Corp has no effect on the direction of Bausch Health i.e., Bausch Health and XXIX Metal go up and down completely randomly.

Pair Corralation between Bausch Health and XXIX Metal

Assuming the 90 days trading horizon Bausch Health Companies is expected to generate 0.64 times more return on investment than XXIX Metal. However, Bausch Health Companies is 1.55 times less risky than XXIX Metal. It trades about -0.02 of its potential returns per unit of risk. XXIX Metal Corp is currently generating about -0.08 per unit of risk. If you would invest  1,073  in Bausch Health Companies on December 21, 2024 and sell it today you would lose (56.00) from holding Bausch Health Companies or give up 5.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Bausch Health Companies  vs.  XXIX Metal Corp

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. In spite of very healthy fundamental indicators, Bausch Health is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

XXIX Metal Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days XXIX Metal Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Bausch Health and XXIX Metal

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

The idea behind Bausch Health Companies and XXIX Metal Corp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.