Correlation Between FitLife Brands, and Balchem

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Can any of the company-specific risk be diversified away by investing in both FitLife Brands, 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 FitLife Brands, and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FitLife Brands, Common and Balchem, you can compare the effects of market volatilities on FitLife Brands, 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 FitLife Brands, with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of FitLife Brands, and Balchem.

Diversification Opportunities for FitLife Brands, and Balchem

FitLifeBalchemDiversified AwayFitLifeBalchemDiversified Away100%
0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between FitLife and Balchem is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding FitLife Brands, Common and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and FitLife Brands, 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 FitLife Brands, Common 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 FitLife Brands, i.e., FitLife Brands, and Balchem go up and down completely randomly.

Pair Corralation between FitLife Brands, and Balchem

Given the investment horizon of 90 days FitLife Brands, is expected to generate 1.1 times less return on investment than Balchem. In addition to that, FitLife Brands, is 2.11 times more volatile than Balchem. It trades about 0.03 of its total potential returns per unit of risk. Balchem is currently generating about 0.06 per unit of volatility. If you would invest  13,851  in Balchem on November 24, 2024 and sell it today you would earn a total of  2,522  from holding Balchem or generate 18.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

FitLife Brands, Common  vs.  Balchem

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-50
JavaScript chart by amCharts 3.21.15FTLF BCPC
       Timeline  
FitLife Brands, Common 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days FitLife Brands, Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1515.51616.51717.5
Balchem 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Balchem has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb155160165170175180185

FitLife Brands, and Balchem Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.18-3.13-2.08-1.03-0.0171.02.023.044.06 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15FTLF BCPC
       Returns  

Pair Trading with FitLife Brands, and Balchem

The main advantage of trading using opposite FitLife Brands, and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FitLife Brands, 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.
The idea behind FitLife Brands, Common and Balchem pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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