Correlation Between Balchem and H B

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

By analyzing existing cross correlation between Balchem and H B Fuller, you can compare the effects of market volatilities on Balchem and H B 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 H B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and H B.

Diversification Opportunities for Balchem and H B

-0.42

Correlation Coefficient

Balchem  H B

Very good diversification

The 3 months correlation between Balchem and FUL is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and H B Fuller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H B Fuller 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 H B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H B Fuller has no effect on the direction of Balchem i.e., Balchem and H B go up and down completely randomly.

Pair Corralation between Balchem and H B

Given the investment horizon of 90 days Balchem is expected to generate 0.7 times more return on investment than H B. However, Balchem is 1.43 times less risky than H B. It trades about 0.02 of its potential returns per unit of risk. H B Fuller is currently generating about -0.12 per unit of risk. If you would invest  16,516  in Balchem on December 27, 2024 and sell it today you would earn a total of  116.00  from holding Balchem or generate 0.7% return on investment over 90 days.

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

Balchem  vs.  H B Fuller

Balchem

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Balchem are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

H B Fuller

Risk-Adjusted Performance

Very Weak

Over the last 90 days H B Fuller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Balchem and H B

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

The idea behind Balchem and H B Fuller 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.