Correlation Between Flexible Solutions and Balchem
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions and Balchem 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 Flexible Solutions and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexible Solutions International and Balchem, you can compare the effects of market volatilities on Flexible Solutions and Balchem 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 Flexible Solutions with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and Balchem.
Diversification Opportunities for Flexible Solutions and Balchem
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Flexible and Balchem is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and Flexible Solutions 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 Flexible Solutions International are associated (or correlated) with Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and Balchem go up and down completely randomly.
Pair Corralation between Flexible Solutions and Balchem
Considering the 90-day investment horizon Flexible Solutions is expected to generate 1.91 times less return on investment than Balchem. In addition to that, Flexible Solutions is 2.73 times more volatile than Balchem. It trades about 0.04 of its total potential returns per unit of risk. Balchem is currently generating about 0.21 per unit of volatility. If you would invest 16,676 in Balchem on August 24, 2024 and sell it today you would earn a total of 1,376 from holding Balchem or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexible Solutions Internation vs. Balchem
Performance |
| Timeline |
| Flexible Solutions |
| Balchem |
Flexible Solutions and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexible Solutions and Balchem
The main advantage of trading using opposite Flexible Solutions and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions position performs unexpectedly, Balchem 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 Balchem will offset losses from the drop in Balchem's long position.| Flexible Solutions vs. Eshallgo Class A | Flexible Solutions vs. Amtech Systems | Flexible Solutions vs. Gold Fields Ltd | Flexible Solutions vs. Aegean Airlines SA |
| Balchem vs. Eshallgo Class A | Balchem vs. Amtech Systems | Balchem vs. Gold Fields Ltd | Balchem vs. Aegean Airlines SA |
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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