Correlation Between LuxUrban Hotels and Bausch

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

By analyzing existing cross correlation between LuxUrban Hotels 1300 and Bausch Health Companies, you can compare the effects of market volatilities on LuxUrban Hotels 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 LuxUrban Hotels with a short position of Bausch. Check out your portfolio center. Please also check ongoing floating volatility patterns of LuxUrban Hotels and Bausch.

Diversification Opportunities for LuxUrban Hotels and Bausch

0.36

Correlation Coefficient

LuxUrban Hotels  Bausch

Weak diversification

The 3 months correlation between LuxUrban and Bausch is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding LuxUrban Hotels 1300 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 LuxUrban Hotels 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 LuxUrban Hotels 1300 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 LuxUrban Hotels i.e., LuxUrban Hotels and Bausch go up and down completely randomly.

Pair Corralation between LuxUrban Hotels and Bausch

Assuming the 90 days horizon LuxUrban Hotels 1300 is expected to generate 0.92 times more return on investment than Bausch. However, LuxUrban Hotels 1300 is 1.09 times less risky than Bausch. It trades about -0.12 of its potential returns per unit of risk. Bausch Health Companies is currently generating about -0.14 per unit of risk. If you would invest  1,461  in LuxUrban Hotels 1300 on October 23, 2024 and sell it today you would lose (661.00) from holding LuxUrban Hotels 1300 or give up 45.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	43.33%
Values	Daily Returns

LuxUrban Hotels 1300  vs.  Bausch Health Companies

LuxUrban Hotels 1300

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LuxUrban Hotels 1300 has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Preferred Stock's technical indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 LuxUrban Hotels and Bausch

The main advantage of trading using opposite LuxUrban Hotels and Bausch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LuxUrban Hotels 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 LuxUrban Hotels 1300 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.