Correlation Between Crown Electrokinetics and Balchem

Can any of the company-specific risk be diversified away by investing in both Crown Electrokinetics 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 Crown Electrokinetics and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crown Electrokinetics Corp and Balchem, you can compare the effects of market volatilities on Crown Electrokinetics 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 Crown Electrokinetics with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Electrokinetics and Balchem.

Diversification Opportunities for Crown Electrokinetics and Balchem

-0.64

Correlation Coefficient

Crown Electrokinetics  Balchem

Excellent diversification

The 3 months correlation between Crown and Balchem is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Crown Electrokinetics Corp and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and Crown Electrokinetics 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 Crown Electrokinetics Corp 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 Crown Electrokinetics i.e., Crown Electrokinetics and Balchem go up and down completely randomly.

Pair Corralation between Crown Electrokinetics and Balchem

Given the investment horizon of 90 days Crown Electrokinetics Corp is expected to under-perform the Balchem. In addition to that, Crown Electrokinetics is 5.77 times more volatile than Balchem. It trades about -0.48 of its total potential returns per unit of risk. Balchem is currently generating about 0.05 per unit of volatility. If you would invest  17,237  in Balchem on September 13, 2024 and sell it today you would earn a total of  488.00  from holding Balchem or generate 2.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Crown Electrokinetics Corp  vs.  Balchem

Crown Electrokinetics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Electrokinetics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Balchem

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Balchem are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Balchem is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Crown Electrokinetics and Balchem

The main advantage of trading using opposite Crown Electrokinetics and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Electrokinetics 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.

The idea behind Crown Electrokinetics Corp and Balchem 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.