Correlation Between Balchem and Sincerity Applied
Can any of the company-specific risk be diversified away by investing in both Balchem and Sincerity Applied 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 Sincerity Applied into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balchem and Sincerity Applied Materials, you can compare the effects of market volatilities on Balchem and Sincerity Applied 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 Sincerity Applied. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and Sincerity Applied.
Diversification Opportunities for Balchem and Sincerity Applied
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Balchem and Sincerity is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and Sincerity Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sincerity Applied 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 Sincerity Applied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sincerity Applied has no effect on the direction of Balchem i.e., Balchem and Sincerity Applied go up and down completely randomly.
Pair Corralation between Balchem and Sincerity Applied
Given the investment horizon of 90 days Balchem is expected to generate 9.51 times less return on investment than Sincerity Applied. But when comparing it to its historical volatility, Balchem is 17.82 times less risky than Sincerity Applied. It trades about 0.09 of its potential returns per unit of risk. Sincerity Applied Materials is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.80 in Sincerity Applied Materials on September 1, 2024 and sell it today you would lose (0.68) from holding Sincerity Applied Materials or give up 85.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Balchem vs. Sincerity Applied Materials
Performance |
| Timeline |
| Balchem |
| Sincerity Applied |
Balchem and Sincerity Applied Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balchem and Sincerity Applied
The main advantage of trading using opposite Balchem and Sincerity Applied positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem position performs unexpectedly, Sincerity Applied 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 Sincerity Applied will offset losses from the drop in Sincerity Applied's long position.| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
| Sincerity Applied vs. Sherwin Williams Co | Sincerity Applied vs. Air Liquide SA | Sincerity Applied vs. Air Products and | Sincerity Applied vs. Ecolab Inc |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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