Correlation Between Balchem Cp and Hawkins

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

Diversification Opportunities for Balchem Cp and Hawkins

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Balchem and Hawkins is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Balchem Cp and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins and Balchem Cp 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 Balchem Cp are associated (or correlated) with Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Balchem Cp i.e., Balchem Cp and Hawkins go up and down completely randomly.

Pair Corralation between Balchem Cp and Hawkins

Given the investment horizon of 90 days Balchem Cp is expected to generate 1.37 times less return on investment than Hawkins. In addition to that, Balchem Cp is 1.05 times more volatile than Hawkins. It trades about 0.22 of its total potential returns per unit of risk. Hawkins is currently generating about 0.32 per unit of volatility. If you would invest  3,562  in Hawkins on May 19, 2022 and sell it today you would earn a total of  891.00  from holding Hawkins or generate 25.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Balchem Cp  vs.  Hawkins

 Performance (%) 
       Timeline  
Balchem Cp 
Balchem Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Balchem Cp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Balchem Cp sustained solid returns over the last few months and may actually be approaching a breakup point.

Balchem Price Channel

Hawkins 
Hawkins Performance
15 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Hawkins disclosed solid returns over the last few months and may actually be approaching a breakup point.

Hawkins Price Channel

Balchem Cp and Hawkins Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Balchem Cp and Hawkins

The main advantage of trading using opposite Balchem Cp and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem Cp position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.

Balchem Cp

Pair trading matchups for Balchem Cp

The idea behind Balchem Cp and Hawkins 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.
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 Price Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

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