Correlation Between ReposiTrak and Balchem

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

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

Diversification Opportunities for ReposiTrak and Balchem

-0.56

Correlation Coefficient

ReposiTrak  Balchem

Excellent diversification

The 3 months correlation between ReposiTrak and Balchem is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ReposiTrak and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and ReposiTrak 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 ReposiTrak 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 ReposiTrak i.e., ReposiTrak and Balchem go up and down completely randomly.

Pair Corralation between ReposiTrak and Balchem

Given the investment horizon of 90 days ReposiTrak is expected to under-perform the Balchem. In addition to that, ReposiTrak is 1.63 times more volatile than Balchem. It trades about -0.05 of its total potential returns per unit of risk. Balchem is currently generating about -0.02 per unit of volatility. If you would invest  16,447  in Balchem on December 23, 2024 and sell it today you would lose (330.00) from holding Balchem or give up 2.01% of portfolio value over 90 days.

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

ReposiTrak  vs.  Balchem

ReposiTrak

Risk-Adjusted Performance

Very Weak

Over the last 90 days ReposiTrak has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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.

Pair Trading with ReposiTrak and Balchem

The main advantage of trading using opposite ReposiTrak and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ReposiTrak 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 ReposiTrak 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.