Correlation Between Balchem and SPACE

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

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

Diversification Opportunities for Balchem and SPACE

-0.58

Correlation Coefficient

Balchem  SPACE

Excellent diversification

The 3 months correlation between Balchem and SPACE is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and SPACE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPACE 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 SPACE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPACE has no effect on the direction of Balchem i.e., Balchem and SPACE go up and down completely randomly.

Pair Corralation between Balchem and SPACE

Given the investment horizon of 90 days Balchem is expected to generate 0.21 times more return on investment than SPACE. However, Balchem is 4.75 times less risky than SPACE. It trades about 0.02 of its potential returns per unit of risk. SPACE is currently generating about -0.12 per unit of risk. If you would invest  16,397  in Balchem on December 29, 2024 and sell it today you would earn a total of  214.00  from holding Balchem or generate 1.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Balchem  vs.  SPACE

Balchem

Risk-Adjusted Performance

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.

SPACE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPACE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for SPACE shareholders.

Pair Trading with Balchem and SPACE

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

The idea behind Balchem and SPACE 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 Transaction History module to view history of all your transactions and understand their impact on performance.