Correlation Between Balchem and 191216DD9

Can any of the company-specific risk be diversified away by investing in both Balchem and 191216DD9 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 191216DD9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Balchem and COCA COLA CO, you can compare the effects of market volatilities on Balchem and 191216DD9 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 191216DD9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and 191216DD9.

Diversification Opportunities for Balchem and 191216DD9

-0.03

Correlation Coefficient

Balchem  191216DD9

Good diversification

The 3 months correlation between Balchem and 191216DD9 is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO 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 191216DD9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of Balchem i.e., Balchem and 191216DD9 go up and down completely randomly.

Pair Corralation between Balchem and 191216DD9

Given the investment horizon of 90 days Balchem is expected to under-perform the 191216DD9. In addition to that, Balchem is 7.98 times more volatile than COCA COLA CO. It trades about -0.03 of its total potential returns per unit of risk. COCA COLA CO is currently generating about 0.12 per unit of volatility. If you would invest  8,965  in COCA COLA CO on December 24, 2024 and sell it today you would earn a total of  115.00  from holding COCA COLA CO or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Balchem  vs.  COCA COLA CO

Balchem

Risk-Adjusted Performance

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.

COCA A CO

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COCA COLA CO are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 191216DD9 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Balchem and 191216DD9

The main advantage of trading using opposite Balchem and 191216DD9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem position performs unexpectedly, 191216DD9 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 191216DD9 will offset losses from the drop in 191216DD9's long position.

The idea behind Balchem and COCA COLA CO 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.