Correlation Between Balchem and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Balchem and PPG Industries 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 PPG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balchem and PPG Industries, you can compare the effects of market volatilities on Balchem and PPG Industries 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 PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and PPG Industries.
Diversification Opportunities for Balchem and PPG Industries
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Balchem and PPG is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries 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 PPG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG Industries has no effect on the direction of Balchem i.e., Balchem and PPG Industries go up and down completely randomly.
Pair Corralation between Balchem and PPG Industries
Given the investment horizon of 90 days Balchem is expected to under-perform the PPG Industries. In addition to that, Balchem is 1.18 times more volatile than PPG Industries. It trades about -0.35 of its total potential returns per unit of risk. PPG Industries is currently generating about -0.18 per unit of volatility. If you would invest 12,579 in PPG Industries on September 25, 2024 and sell it today you would lose (481.00) from holding PPG Industries or give up 3.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balchem vs. PPG Industries
Performance |
| Timeline |
| Balchem |
| PPG Industries |
Balchem and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balchem and PPG Industries
The main advantage of trading using opposite Balchem and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem position performs unexpectedly, PPG Industries 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 PPG Industries will offset losses from the drop in PPG Industries' 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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