Correlation Between Jfrog and Bausch

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

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

Diversification Opportunities for Jfrog and Bausch

0.19

Correlation Coefficient

Jfrog  Bausch

Average diversification

The 3 months correlation between Jfrog and Bausch is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Jfrog 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 Jfrog 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 Jfrog 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 Jfrog i.e., Jfrog and Bausch go up and down completely randomly.

Pair Corralation between Jfrog and Bausch

Given the investment horizon of 90 days Jfrog is expected to under-perform the Bausch. But the stock apears to be less risky and, when comparing its historical volatility, Jfrog is 1.6 times less risky than Bausch. The stock trades about -0.01 of its potential returns per unit of risk. The Bausch Health Companies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,770  in Bausch Health Companies on October 12, 2024 and sell it today you would lose (464.00) from holding Bausch Health Companies or give up 9.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	39.57%
Values	Daily Returns

Jfrog  vs.  Bausch Health Companies

Jfrog

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jfrog has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Jfrog is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for Bausch Health Companies investors.

Pair Trading with Jfrog and Bausch

The main advantage of trading using opposite Jfrog and Bausch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jfrog 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 Jfrog 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.