Correlation Between Balchem and Electrovaya Common

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

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

Diversification Opportunities for Balchem and Electrovaya Common

0.14

Correlation Coefficient

Balchem  Electrovaya Common

Average diversification

The 3 months correlation between Balchem and Electrovaya is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares and Balchem 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 Balchem are associated (or correlated) with Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of Balchem i.e., Balchem and Electrovaya Common go up and down completely randomly.

Pair Corralation between Balchem and Electrovaya Common

Given the investment horizon of 90 days Balchem is expected to generate 0.41 times more return on investment than Electrovaya Common. However, Balchem is 2.47 times less risky than Electrovaya Common. It trades about 0.03 of its potential returns per unit of risk. Electrovaya Common Shares is currently generating about -0.01 per unit of risk. If you would invest  14,600  in Balchem on October 12, 2024 and sell it today you would earn a total of  1,109  from holding Balchem or generate 7.6% return on investment over 90 days.

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

Balchem  vs.  Electrovaya Common Shares

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 latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Electrovaya Common Shares

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Electrovaya Common may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Balchem and Electrovaya Common

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

The idea behind Balchem and Electrovaya Common Shares 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.