Correlation Between Contextlogic and Bausch

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

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

Diversification Opportunities for Contextlogic and Bausch

0.17

Correlation Coefficient

Contextlogic  Bausch

Average diversification

The 3 months correlation between Contextlogic and Bausch is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Contextlogic 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 Contextlogic 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 Contextlogic 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 Contextlogic i.e., Contextlogic and Bausch go up and down completely randomly.

Pair Corralation between Contextlogic and Bausch

Given the investment horizon of 90 days Contextlogic is expected to generate 2.64 times less return on investment than Bausch. But when comparing it to its historical volatility, Contextlogic is 2.1 times less risky than Bausch. It trades about 0.06 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,463  in Bausch Health Companies on December 26, 2024 and sell it today you would earn a total of  846.00  from holding Bausch Health Companies or generate 15.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	83.33%
Values	Daily Returns

Contextlogic  vs.  Bausch Health Companies

Contextlogic

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Contextlogic are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Contextlogic exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bausch Health Companies

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bausch Health Companies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Bausch sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Contextlogic and Bausch

The main advantage of trading using opposite Contextlogic and Bausch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contextlogic 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 Contextlogic 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.