Correlation Between Air Transport and Balchem
Can any of the company-specific risk be diversified away by investing in both Air Transport 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 Air Transport and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and Balchem, you can compare the effects of market volatilities on Air Transport 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 Air Transport with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Balchem.
Diversification Opportunities for Air Transport and Balchem
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and Balchem is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and Air Transport 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 Air Transport Services 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 Air Transport i.e., Air Transport and Balchem go up and down completely randomly.
Pair Corralation between Air Transport and Balchem
Given the investment horizon of 90 days Air Transport Services is expected to generate 0.14 times more return on investment than Balchem. However, Air Transport Services is 7.17 times less risky than Balchem. It trades about 0.34 of its potential returns per unit of risk. Balchem is currently generating about 0.03 per unit of risk. If you would invest 2,200 in Air Transport Services on November 4, 2024 and sell it today you would earn a total of 22.00 from holding Air Transport Services or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. Balchem
Performance |
| Timeline |
| Air Transport Services |
| Balchem |
Air Transport and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Balchem
The main advantage of trading using opposite Air Transport and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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.| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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