Correlation Between Aerofoam Metals and Balchem

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Can any of the company-specific risk be diversified away by investing in both Aerofoam Metals and Balchem 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 Aerofoam Metals and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerofoam Metals and Balchem, you can compare the effects of market volatilities on Aerofoam Metals and Balchem 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 Aerofoam Metals with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerofoam Metals and Balchem.

Diversification Opportunities for Aerofoam Metals and Balchem

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Aerofoam and Balchem is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aerofoam Metals and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and Aerofoam Metals 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 Aerofoam Metals are associated (or correlated) with Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of Aerofoam Metals i.e., Aerofoam Metals and Balchem go up and down completely randomly.

Pair Corralation between Aerofoam Metals and Balchem

If you would invest  0.01  in Aerofoam Metals on October 21, 2024 and sell it today you would earn a total of  0.00  from holding Aerofoam Metals or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy95.38%
ValuesDaily Returns

Aerofoam Metals  vs.  Balchem

 Performance 
       Timeline  
Aerofoam Metals 

Risk-Adjusted Performance

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Over the last 90 days Aerofoam Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Aerofoam Metals is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.
Balchem 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Balchem has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Balchem is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Aerofoam Metals and Balchem Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aerofoam Metals and Balchem

The main advantage of trading using opposite Aerofoam Metals and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerofoam Metals position performs unexpectedly, Balchem 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 Balchem will offset losses from the drop in Balchem's long position.
The idea behind Aerofoam Metals and Balchem 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.
Check out your portfolio center.
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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