Correlation Between AAC TECHNOLOGHLDGADR and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and Quaker Chemical 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 AAC TECHNOLOGHLDGADR and Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and Quaker Chemical, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR and Quaker Chemical 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 AAC TECHNOLOGHLDGADR with a short position of Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and Quaker Chemical.
Diversification Opportunities for AAC TECHNOLOGHLDGADR and Quaker Chemical
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AAC and Quaker is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR are associated (or correlated) with Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and Quaker Chemical go up and down completely randomly.
Pair Corralation between AAC TECHNOLOGHLDGADR and Quaker Chemical
Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 2.04 times more return on investment than Quaker Chemical. However, AAC TECHNOLOGHLDGADR is 2.04 times more volatile than Quaker Chemical. It trades about 0.43 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.31 per unit of risk. If you would invest 342.00 in AAC TECHNOLOGHLDGADR on September 15, 2024 and sell it today you would earn a total of 112.00 from holding AAC TECHNOLOGHLDGADR or generate 32.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAC TECHNOLOGHLDGADR vs. Quaker Chemical
Performance |
| Timeline |
| AAC TECHNOLOGHLDGADR |
| Quaker Chemical |
AAC TECHNOLOGHLDGADR and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC TECHNOLOGHLDGADR and Quaker Chemical
The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| AAC TECHNOLOGHLDGADR vs. Cisco Systems | AAC TECHNOLOGHLDGADR vs. Nokia | AAC TECHNOLOGHLDGADR vs. Superior Plus Corp | AAC TECHNOLOGHLDGADR vs. SIVERS SEMICONDUCTORS AB |
| Quaker Chemical vs. AAC TECHNOLOGHLDGADR | Quaker Chemical vs. HOCHSCHILD MINING | Quaker Chemical vs. OURGAME INTHOLDL 00005 | Quaker Chemical vs. Boyd Gaming |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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