Correlation Between Balchem and DANAHER

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

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

Diversification Opportunities for Balchem and DANAHER

0.0

Correlation Coefficient

Balchem  DANAHER

Pay attention - limited upside

The 3 months correlation between Balchem and DANAHER is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and DANAHER PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DANAHER PORATION 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 DANAHER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DANAHER PORATION has no effect on the direction of Balchem i.e., Balchem and DANAHER go up and down completely randomly.

Pair Corralation between Balchem and DANAHER

Given the investment horizon of 90 days Balchem is expected to generate 142.11 times less return on investment than DANAHER. But when comparing it to its historical volatility, Balchem is 65.56 times less risky than DANAHER. It trades about 0.04 of its potential returns per unit of risk. DANAHER PORATION is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,938  in DANAHER PORATION on October 10, 2024 and sell it today you would lose (270.00) from holding DANAHER PORATION or give up 3.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	83.06%
Values	Daily Returns

Balchem  vs.  DANAHER PORATION

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.

DANAHER PORATION

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DANAHER PORATION are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, DANAHER may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Balchem and DANAHER

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

The idea behind Balchem and DANAHER PORATION 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.