Correlation Between Bausch and Freedom Holding

Can any of the company-specific risk be diversified away by investing in both Bausch and Freedom Holding 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 and Freedom Holding 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 Freedom Holding Corp, you can compare the effects of market volatilities on Bausch and Freedom Holding 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 with a short position of Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch and Freedom Holding.

Diversification Opportunities for Bausch and Freedom Holding

-0.07

Correlation Coefficient

Bausch  Freedom Holding

Good diversification

The 3 months correlation between Bausch and Freedom is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Freedom Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holding Corp and Bausch 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 Freedom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holding Corp has no effect on the direction of Bausch i.e., Bausch and Freedom Holding go up and down completely randomly.

Pair Corralation between Bausch and Freedom Holding

Assuming the 90 days trading horizon Bausch Health Companies is expected to under-perform the Freedom Holding. In addition to that, Bausch is 3.04 times more volatile than Freedom Holding Corp. It trades about -0.12 of its total potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.05 per unit of volatility. If you would invest  13,083  in Freedom Holding Corp on December 24, 2024 and sell it today you would earn a total of  813.00  from holding Freedom Holding Corp or generate 6.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	47.54%
Values	Daily Returns

Bausch Health Companies  vs.  Freedom Holding Corp

Bausch Health Companies

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for Bausch Health Companies investors.

Freedom Holding Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Freedom Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bausch and Freedom Holding

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

The idea behind Bausch Health Companies and Freedom Holding 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.