Correlation Between Bausch Health and PT Bank

Can any of the company-specific risk be diversified away by investing in both Bausch Health and PT Bank 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 PT Bank 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 PT Bank Rakyat, you can compare the effects of market volatilities on Bausch Health and PT Bank 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 PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and PT Bank.

Diversification Opportunities for Bausch Health and PT Bank

0.23

Correlation Coefficient

Bausch Health  PT Bank

Modest diversification

The 3 months correlation between Bausch and BYRA is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat 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 PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of Bausch Health i.e., Bausch Health and PT Bank go up and down completely randomly.

Pair Corralation between Bausch Health and PT Bank

Assuming the 90 days horizon Bausch Health Companies is expected to generate 0.51 times more return on investment than PT Bank. However, Bausch Health Companies is 1.97 times less risky than PT Bank. It trades about 0.0 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about -0.02 per unit of risk. If you would invest  741.00  in Bausch Health Companies on October 23, 2024 and sell it today you would lose (27.00) from holding Bausch Health Companies or give up 3.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bausch Health Companies  vs.  PT Bank Rakyat

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 nearly stable basic indicators, Bausch Health is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Bausch Health and PT Bank

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

The idea behind Bausch Health Companies and PT Bank Rakyat 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.