Correlation Between Koppers Holdings and Balchem

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

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

Diversification Opportunities for Koppers Holdings and Balchem

0.83

Correlation Coefficient

Koppers Holdings  Balchem

Very poor diversification

The 3 months correlation between Koppers and Balchem is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Koppers Holdings and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and Koppers Holdings 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 Koppers Holdings 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 Koppers Holdings i.e., Koppers Holdings and Balchem go up and down completely randomly.

Pair Corralation between Koppers Holdings and Balchem

Considering the 90-day investment horizon Koppers Holdings is expected to under-perform the Balchem. In addition to that, Koppers Holdings is 1.23 times more volatile than Balchem. It trades about -0.43 of its total potential returns per unit of risk. Balchem is currently generating about -0.4 per unit of volatility. If you would invest  17,448  in Balchem on October 11, 2024 and sell it today you would lose (1,739) from holding Balchem or give up 9.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Koppers Holdings  vs.  Balchem

Koppers Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koppers Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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.

Pair Trading with Koppers Holdings and Balchem

The main advantage of trading using opposite Koppers Holdings and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koppers Holdings 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 Koppers Holdings 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 Global Correlations module to find global opportunities by holding instruments from different markets.