Correlation Between Datang International and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Datang International 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 Datang International and Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datang International Power and Quaker Chemical, you can compare the effects of market volatilities on Datang International 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 Datang International with a short position of Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang International and Quaker Chemical.
Diversification Opportunities for Datang International and Quaker Chemical
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Datang and Quaker is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Datang International Power and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and Datang International 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 Datang International Power 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 Datang International i.e., Datang International and Quaker Chemical go up and down completely randomly.
Pair Corralation between Datang International and Quaker Chemical
Assuming the 90 days horizon Datang International Power is expected to generate 1.95 times more return on investment than Quaker Chemical. However, Datang International is 1.95 times more volatile than Quaker Chemical. It trades about 0.1 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.36 per unit of risk. If you would invest 17.00 in Datang International Power on September 22, 2024 and sell it today you would earn a total of 1.00 from holding Datang International Power or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Datang International Power vs. Quaker Chemical
Performance |
| Timeline |
| Datang International |
| Quaker Chemical |
Datang International and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Datang International and Quaker Chemical
The main advantage of trading using opposite Datang International and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang International 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.| Datang International vs. CN YANGTPWR GDR | Datang International vs. SIEMENS ENERGY AG | Datang International vs. Siemens Energy AG | Datang International vs. Vistra Corp |
| Quaker Chemical vs. TERADATA | Quaker Chemical vs. Datang International Power | Quaker Chemical vs. Science Applications International | Quaker Chemical vs. Automatic Data Processing |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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