Correlation Between Balchem and Alvotech
Can any of the company-specific risk be diversified away by investing in both Balchem and Alvotech 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 Balchem and Alvotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balchem and Alvotech, you can compare the effects of market volatilities on Balchem and Alvotech 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 Balchem with a short position of Alvotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and Alvotech.
Diversification Opportunities for Balchem and Alvotech
Good diversification
The 3 months correlation between Balchem and Alvotech is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Balchem 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 Balchem are associated (or correlated) with Alvotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvotech has no effect on the direction of Balchem i.e., Balchem and Alvotech go up and down completely randomly.
Pair Corralation between Balchem and Alvotech
Given the investment horizon of 90 days Balchem is expected to generate 0.91 times more return on investment than Alvotech. However, Balchem is 1.09 times less risky than Alvotech. It trades about 0.23 of its potential returns per unit of risk. Alvotech is currently generating about -0.26 per unit of risk. If you would invest 16,733 in Balchem on September 1, 2024 and sell it today you would earn a total of 1,319 from holding Balchem or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balchem vs. Alvotech
Performance |
| Timeline |
| Balchem |
| Alvotech |
Balchem and Alvotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balchem and Alvotech
The main advantage of trading using opposite Balchem and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem position performs unexpectedly, Alvotech 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 Alvotech will offset losses from the drop in Alvotech's long position.| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
| Alvotech vs. Tff Pharmaceuticals | Alvotech vs. Eliem Therapeutics | Alvotech vs. Inhibrx | Alvotech vs. Enliven Therapeutics |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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