Correlation Between Bausch Health and Shionogi

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

Diversification Opportunities for Bausch Health and Shionogi

-0.44

Correlation Coefficient

Bausch Health  Shionogi

Very good diversification

The 3 months correlation between Bausch and Shionogi is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Shionogi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi and Bausch Health 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 Shionogi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shionogi has no effect on the direction of Bausch Health i.e., Bausch Health and Shionogi go up and down completely randomly.

Pair Corralation between Bausch Health and Shionogi

Assuming the 90 days horizon Bausch Health Companies is expected to generate 1.1 times more return on investment than Shionogi. However, Bausch Health is 1.1 times more volatile than Shionogi Co. It trades about 0.18 of its potential returns per unit of risk. Shionogi Co is currently generating about 0.0 per unit of risk. If you would invest  567.00  in Bausch Health Companies on September 13, 2024 and sell it today you would earn a total of  227.00  from holding Bausch Health Companies or generate 40.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bausch Health Companies  vs.  Shionogi Co

Bausch Health Companies

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bausch Health Companies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bausch Health reported solid returns over the last few months and may actually be approaching a breakup point.

Shionogi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shionogi Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Shionogi is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bausch Health and Shionogi

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

The idea behind Bausch Health Companies and Shionogi Co 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .