Correlation Between KKR Co and Balchem
Can any of the company-specific risk be diversified away by investing in both KKR Co 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 KKR Co and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KKR Co LP and Balchem, you can compare the effects of market volatilities on KKR Co 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 KKR Co with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Co and Balchem.
Diversification Opportunities for KKR Co and Balchem
Poor diversification
The 3 months correlation between KKR and Balchem is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and KKR Co 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 KKR Co LP 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 KKR Co i.e., KKR Co and Balchem go up and down completely randomly.
Pair Corralation between KKR Co and Balchem
Considering the 90-day investment horizon KKR Co LP is expected to generate 1.47 times more return on investment than Balchem. However, KKR Co is 1.47 times more volatile than Balchem. It trades about 0.34 of its potential returns per unit of risk. Balchem is currently generating about 0.23 per unit of risk. If you would invest 13,806 in KKR Co LP on September 1, 2024 and sell it today you would earn a total of 2,481 from holding KKR Co LP or generate 17.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KKR Co LP vs. Balchem
Performance |
| Timeline |
| KKR Co LP |
| Balchem |
KKR Co and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KKR Co and Balchem
The main advantage of trading using opposite KKR Co and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KKR Co 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.| KKR Co vs. Carlyle Group | KKR Co vs. Ares Management LP | KKR Co vs. Blackstone Group | KKR Co vs. Blue Owl Capital |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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