Correlation Between Balchem and Gentex
Can any of the company-specific risk be diversified away by investing in both Balchem and Gentex 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 Gentex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balchem and Gentex, you can compare the effects of market volatilities on Balchem and Gentex 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 Gentex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and Gentex.
Diversification Opportunities for Balchem and Gentex
Weak diversification
The 3 months correlation between Balchem and Gentex is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Balchem i.e., Balchem and Gentex go up and down completely randomly.
Pair Corralation between Balchem and Gentex
Given the investment horizon of 90 days Balchem is expected to generate 1.14 times more return on investment than Gentex. However, Balchem is 1.14 times more volatile than Gentex. It trades about 0.06 of its potential returns per unit of risk. Gentex is currently generating about 0.02 per unit of risk. If you would invest 12,407 in Balchem on August 31, 2024 and sell it today you would earn a total of 5,562 from holding Balchem or generate 44.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balchem vs. Gentex
Performance |
| Timeline |
| Balchem |
| Gentex |
Balchem and Gentex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balchem and Gentex
The main advantage of trading using opposite Balchem and Gentex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem position performs unexpectedly, Gentex 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 Gentex will offset losses from the drop in Gentex's long position.| Balchem vs. Eastman Chemical | Balchem vs. Linde plc Ordinary | Balchem vs. Ecolab Inc | Balchem vs. Sherwin Williams Co |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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