Correlation Between Balchem and Crown Electrokinetics
Can any of the company-specific risk be diversified away by investing in both Balchem and Crown Electrokinetics 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 Crown Electrokinetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balchem and Crown Electrokinetics Corp, you can compare the effects of market volatilities on Balchem and Crown Electrokinetics 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 Crown Electrokinetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and Crown Electrokinetics.
Diversification Opportunities for Balchem and Crown Electrokinetics
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Balchem and Crown is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and Crown Electrokinetics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Electrokinetics 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 Crown Electrokinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Electrokinetics has no effect on the direction of Balchem i.e., Balchem and Crown Electrokinetics go up and down completely randomly.
Pair Corralation between Balchem and Crown Electrokinetics
Given the investment horizon of 90 days Balchem is expected to generate 0.07 times more return on investment than Crown Electrokinetics. However, Balchem is 13.78 times less risky than Crown Electrokinetics. It trades about 0.05 of its potential returns per unit of risk. Crown Electrokinetics Corp is currently generating about -0.03 per unit of risk. If you would invest 13,152 in Balchem on August 28, 2024 and sell it today you would earn a total of 5,117 from holding Balchem or generate 38.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balchem vs. Crown Electrokinetics Corp
Performance |
| Timeline |
| Balchem |
| Crown Electrokinetics |
Balchem and Crown Electrokinetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balchem and Crown Electrokinetics
The main advantage of trading using opposite Balchem and Crown Electrokinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem position performs unexpectedly, Crown Electrokinetics 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 Crown Electrokinetics will offset losses from the drop in Crown Electrokinetics' long position.| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
| Crown Electrokinetics vs. Coroware | Crown Electrokinetics vs. Loop Industries | Crown Electrokinetics vs. Hudson Technologies | Crown Electrokinetics vs. General Environmental Management |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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