Correlation Between GAMING FAC and Bausch Health

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

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

Diversification Opportunities for GAMING FAC and Bausch Health

0.02

Correlation Coefficient

GAMING FAC  Bausch Health

Significant diversification

The 3 months correlation between GAMING and Bausch is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding GAMING FAC SA 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 GAMING FAC 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 GAMING FAC SA are associated (or correlated) with Bausch Health. 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 GAMING FAC i.e., GAMING FAC and Bausch Health go up and down completely randomly.

Pair Corralation between GAMING FAC and Bausch Health

Assuming the 90 days horizon GAMING FAC SA is expected to under-perform the Bausch Health. In addition to that, GAMING FAC is 1.19 times more volatile than Bausch Health Companies. It trades about -0.07 of its total potential returns per unit of risk. Bausch Health Companies is currently generating about 0.0 per unit of volatility. If you would invest  718.00  in Bausch Health Companies on September 22, 2024 and sell it today you would lose (14.00) from holding Bausch Health Companies or give up 1.95% of portfolio value over 90 days.

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

GAMING FAC SA  vs.  Bausch Health Companies

GAMING FAC SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMING FAC SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 nearly stable basic indicators, Bausch Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GAMING FAC and Bausch Health

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

The idea behind GAMING FAC SA 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.