Correlation Between Balchem and Core Molding
Can any of the company-specific risk be diversified away by investing in both Balchem and Core Molding 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 Core Molding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balchem and Core Molding Technologies, you can compare the effects of market volatilities on Balchem and Core Molding 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 Core Molding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and Core Molding.
Diversification Opportunities for Balchem and Core Molding
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Balchem and Core is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and Core Molding Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Molding Technologies 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 Core Molding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Molding Technologies has no effect on the direction of Balchem i.e., Balchem and Core Molding go up and down completely randomly.
Pair Corralation between Balchem and Core Molding
Given the investment horizon of 90 days Balchem is expected to generate 2.01 times less return on investment than Core Molding. But when comparing it to its historical volatility, Balchem is 2.06 times less risky than Core Molding. It trades about 0.05 of its potential returns per unit of risk. Core Molding Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,061 in Core Molding Technologies on August 28, 2024 and sell it today you would earn a total of 716.00 from holding Core Molding Technologies or generate 67.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balchem vs. Core Molding Technologies
Performance |
| Timeline |
| Balchem |
| Core Molding Technologies |
Balchem and Core Molding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balchem and Core Molding
The main advantage of trading using opposite Balchem and Core Molding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem position performs unexpectedly, Core Molding 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 Core Molding will offset losses from the drop in Core Molding's long position.| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
| Core Molding vs. Innospec | Core Molding vs. H B Fuller | Core Molding vs. Quaker Chemical | Core Molding vs. Minerals Technologies |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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