Correlation Between Haemonetics and Bausch Lomb

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

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

Diversification Opportunities for Haemonetics and Bausch Lomb

0.88

Correlation Coefficient

Haemonetics  Bausch Lomb

Very poor diversification

The 3 months correlation between Haemonetics and Bausch is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Haemonetics and Bausch Lomb Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Lomb Corp and Haemonetics 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 Haemonetics are associated (or correlated) with Bausch Lomb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Lomb Corp has no effect on the direction of Haemonetics i.e., Haemonetics and Bausch Lomb go up and down completely randomly.

Pair Corralation between Haemonetics and Bausch Lomb

Considering the 90-day investment horizon Haemonetics is expected to under-perform the Bausch Lomb. In addition to that, Haemonetics is 1.13 times more volatile than Bausch Lomb Corp. It trades about -0.18 of its total potential returns per unit of risk. Bausch Lomb Corp is currently generating about -0.13 per unit of volatility. If you would invest  1,947  in Bausch Lomb Corp on December 1, 2024 and sell it today you would lose (347.00) from holding Bausch Lomb Corp or give up 17.82% of portfolio value over 90 days.

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

Haemonetics  vs.  Bausch Lomb Corp

Haemonetics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Haemonetics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Bausch Lomb Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bausch Lomb 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 fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Haemonetics and Bausch Lomb

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

The idea behind Haemonetics and Bausch Lomb 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.