Correlation Between General Environmental and Balchem
Can any of the company-specific risk be diversified away by investing in both General Environmental 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 General Environmental and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Environmental Management and Balchem, you can compare the effects of market volatilities on General Environmental 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 General Environmental with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Environmental and Balchem.
Diversification Opportunities for General Environmental and Balchem
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between General and Balchem is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding General Environmental Manageme and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and General Environmental 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 General Environmental Management 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 General Environmental i.e., General Environmental and Balchem go up and down completely randomly.
Pair Corralation between General Environmental and Balchem
Given the investment horizon of 90 days General Environmental Management is expected to generate 3.93 times more return on investment than Balchem. However, General Environmental is 3.93 times more volatile than Balchem. It trades about 0.19 of its potential returns per unit of risk. Balchem is currently generating about 0.23 per unit of risk. If you would invest 65.00 in General Environmental Management on September 1, 2024 and sell it today you would earn a total of 16.00 from holding General Environmental Management or generate 24.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Environmental Manageme vs. Balchem
Performance |
| Timeline |
| General Environmental |
| Balchem |
General Environmental and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Environmental and Balchem
The main advantage of trading using opposite General Environmental and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Environmental 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.| General Environmental vs. Element Solutions | General Environmental vs. Orion Engineered Carbons | General Environmental vs. Minerals Technologies | General Environmental vs. Ingevity Corp |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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