Correlation Between SBM Offshore and Balchem
Can any of the company-specific risk be diversified away by investing in both SBM Offshore 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 SBM Offshore and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM Offshore NV and Balchem, you can compare the effects of market volatilities on SBM Offshore 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 SBM Offshore with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Balchem.
Diversification Opportunities for SBM Offshore and Balchem
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBM and Balchem is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and SBM Offshore 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 SBM Offshore NV 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 SBM Offshore i.e., SBM Offshore and Balchem go up and down completely randomly.
Pair Corralation between SBM Offshore and Balchem
Assuming the 90 days horizon SBM Offshore NV is expected to generate 1.15 times more return on investment than Balchem. However, SBM Offshore is 1.15 times more volatile than Balchem. It trades about 0.08 of its potential returns per unit of risk. Balchem is currently generating about 0.09 per unit of risk. If you would invest 1,607 in SBM Offshore NV on September 1, 2024 and sell it today you would earn a total of 273.00 from holding SBM Offshore NV or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Balchem
Performance |
| Timeline |
| SBM Offshore NV |
| Balchem |
SBM Offshore and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Balchem
The main advantage of trading using opposite SBM Offshore and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore 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.| SBM Offshore vs. Expro Group Holdings | SBM Offshore vs. ChampionX | SBM Offshore vs. Ranger Energy Services | SBM Offshore vs. Cactus Inc |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |