Correlation Between Bausch and Viemed Healthcare

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

Diversification Opportunities for Bausch and Viemed Healthcare

-0.45

Correlation Coefficient

Bausch  Viemed Healthcare

Very good diversification

The 3 months correlation between Bausch and Viemed is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare 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 Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of Bausch i.e., Bausch and Viemed Healthcare go up and down completely randomly.

Pair Corralation between Bausch and Viemed Healthcare

Assuming the 90 days trading horizon Bausch Health Companies is expected to under-perform the Viemed Healthcare. In addition to that, Bausch is 6.85 times more volatile than Viemed Healthcare. It trades about -0.02 of its total potential returns per unit of risk. Viemed Healthcare is currently generating about -0.07 per unit of volatility. If you would invest  783.00  in Viemed Healthcare on December 22, 2024 and sell it today you would lose (59.00) from holding Viemed Healthcare or give up 7.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	73.77%
Values	Daily Returns

Bausch Health Companies  vs.  Viemed Healthcare

Bausch Health Companies

Risk-Adjusted Performance

Modest

Over the last 90 days Bausch Health Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating 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.

Viemed Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viemed Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Bausch and Viemed Healthcare

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

The idea behind Bausch Health Companies and Viemed Healthcare 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.