Correlation Between Electrovaya Common and Balchem

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

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

Diversification Opportunities for Electrovaya Common and Balchem

-0.59

Correlation Coefficient

Electrovaya Common  Balchem

Excellent diversification

The 3 months correlation between Electrovaya and Balchem is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Electrovaya Common Shares and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and Electrovaya Common 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 Electrovaya Common Shares are associated (or correlated) with Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of Electrovaya Common i.e., Electrovaya Common and Balchem go up and down completely randomly.

Pair Corralation between Electrovaya Common and Balchem

Given the investment horizon of 90 days Electrovaya Common Shares is expected to generate 2.77 times more return on investment than Balchem. However, Electrovaya Common is 2.77 times more volatile than Balchem. It trades about 0.14 of its potential returns per unit of risk. Balchem is currently generating about 0.0 per unit of risk. If you would invest  217.00  in Electrovaya Common Shares on December 21, 2024 and sell it today you would earn a total of  68.00  from holding Electrovaya Common Shares or generate 31.34% return on investment over 90 days.

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

Electrovaya Common Shares  vs.  Balchem

Electrovaya Common Shares

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Electrovaya Common sustained solid returns over the last few months and may actually be approaching a breakup point.

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Electrovaya Common and Balchem

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

The idea behind Electrovaya Common Shares and Balchem 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.