Correlation Between Bausch Health and CODERE ONLINE

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

Diversification Opportunities for Bausch Health and CODERE ONLINE

-0.15

Correlation Coefficient

Bausch Health  CODERE ONLINE

Good diversification

The 3 months correlation between Bausch and CODERE is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and CODERE ONLINE LUX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CODERE ONLINE LUX 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 CODERE ONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CODERE ONLINE LUX has no effect on the direction of Bausch Health i.e., Bausch Health and CODERE ONLINE go up and down completely randomly.

Pair Corralation between Bausch Health and CODERE ONLINE

Assuming the 90 days horizon Bausch Health is expected to generate 8.23 times less return on investment than CODERE ONLINE. But when comparing it to its historical volatility, Bausch Health Companies is 1.19 times less risky than CODERE ONLINE. It trades about 0.01 of its potential returns per unit of risk. CODERE ONLINE LUX is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  294.00  in CODERE ONLINE LUX on October 4, 2024 and sell it today you would earn a total of  346.00  from holding CODERE ONLINE LUX or generate 117.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bausch Health Companies  vs.  CODERE ONLINE LUX

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

CODERE ONLINE LUX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CODERE ONLINE LUX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Bausch Health and CODERE ONLINE

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

The idea behind Bausch Health Companies and CODERE ONLINE LUX 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 Transaction History module to view history of all your transactions and understand their impact on performance.