Correlation Between Balchem and H B
Can any of the company-specific risk be diversified away by investing in both Balchem and H B 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 H B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balchem and H B Fuller, you can compare the effects of market volatilities on Balchem and H B 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 H B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and H B.
Diversification Opportunities for Balchem and H B
Very good diversification
The 3 months correlation between Balchem and FUL is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and H B Fuller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H B Fuller 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 H B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H B Fuller has no effect on the direction of Balchem i.e., Balchem and H B go up and down completely randomly.
Pair Corralation between Balchem and H B
Given the investment horizon of 90 days Balchem is expected to under-perform the H B. But the stock apears to be less risky and, when comparing its historical volatility, Balchem is 1.79 times less risky than H B. The stock trades about -0.08 of its potential returns per unit of risk. The H B Fuller is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,343 in H B Fuller on January 13, 2025 and sell it today you would earn a total of 30.00 from holding H B Fuller or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balchem vs. H B Fuller
Performance |
| Timeline |
| Balchem |
| H B Fuller |
Balchem and H B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balchem and H B
The main advantage of trading using opposite Balchem and H B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem position performs unexpectedly, H B 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 H B will offset losses from the drop in H B's long position.| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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