Correlation Between SunLink Health and Balchem
Can any of the company-specific risk be diversified away by investing in both SunLink Health 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 SunLink Health and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunLink Health Systems and Balchem, you can compare the effects of market volatilities on SunLink Health 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 SunLink Health with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunLink Health and Balchem.
Diversification Opportunities for SunLink Health and Balchem
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SunLink and Balchem is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and SunLink Health 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 SunLink Health Systems 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 SunLink Health i.e., SunLink Health and Balchem go up and down completely randomly.
Pair Corralation between SunLink Health and Balchem
Considering the 90-day investment horizon SunLink Health Systems is expected to under-perform the Balchem. In addition to that, SunLink Health is 2.41 times more volatile than Balchem. It trades about -0.16 of its total potential returns per unit of risk. Balchem is currently generating about 0.21 per unit of volatility. If you would invest 16,926 in Balchem on August 30, 2024 and sell it today you would earn a total of 1,306 from holding Balchem or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunLink Health Systems vs. Balchem
Performance |
| Timeline |
| SunLink Health Systems |
| Balchem |
SunLink Health and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunLink Health and Balchem
The main advantage of trading using opposite SunLink Health and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunLink Health 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.| SunLink Health vs. Humana Inc | SunLink Health vs. Cigna Corp | SunLink Health vs. Elevance Health | SunLink Health vs. Centene Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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