Correlation Between Femasys and Balchem

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

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

Diversification Opportunities for Femasys and Balchem

0.61

Correlation Coefficient

Femasys  Balchem

Poor diversification

The 3 months correlation between Femasys and Balchem is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Femasys and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and Femasys 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 Femasys 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 Femasys i.e., Femasys and Balchem go up and down completely randomly.

Pair Corralation between Femasys and Balchem

Given the investment horizon of 90 days Femasys is expected to generate 3.42 times more return on investment than Balchem. However, Femasys is 3.42 times more volatile than Balchem. It trades about 0.09 of its potential returns per unit of risk. Balchem is currently generating about 0.02 per unit of risk. If you would invest  110.00  in Femasys on December 29, 2024 and sell it today you would earn a total of  24.00  from holding Femasys or generate 21.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Femasys  vs.  Balchem

Femasys

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Femasys are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Femasys showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Femasys and Balchem

The main advantage of trading using opposite Femasys and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Femasys 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 Femasys 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.