Correlation Between AviChina Industry and Balchem

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

By analyzing existing cross correlation between AviChina Industry Technology and Balchem, you can compare the effects of market volatilities on AviChina Industry 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 AviChina Industry with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of AviChina Industry and Balchem.

Diversification Opportunities for AviChina Industry and Balchem

0.0

Correlation Coefficient

AviChina Industry  Balchem

Pay attention - limited upside

The 3 months correlation between AviChina and Balchem is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AviChina Industry Technology and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and AviChina Industry 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 AviChina Industry Technology 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 AviChina Industry i.e., AviChina Industry and Balchem go up and down completely randomly.

Pair Corralation between AviChina Industry and Balchem

If you would invest  0.00  in AviChina Industry Technology on October 24, 2024 and sell it today you would earn a total of  0.00  from holding AviChina Industry Technology or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

AviChina Industry Technology  vs.  Balchem

AviChina Industry

Risk-Adjusted Performance

0 of 100

Very Weak

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

Balchem

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with AviChina Industry and Balchem

The main advantage of trading using opposite AviChina Industry and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AviChina Industry 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 AviChina Industry Technology 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.