Correlation Between CAIRN HOMES and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both CAIRN HOMES 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 CAIRN HOMES and Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAIRN HOMES EO and Quaker Chemical, you can compare the effects of market volatilities on CAIRN HOMES 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 CAIRN HOMES with a short position of Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAIRN HOMES and Quaker Chemical.
Diversification Opportunities for CAIRN HOMES and Quaker Chemical
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CAIRN and Quaker is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CAIRN HOMES EO and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and CAIRN HOMES 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 CAIRN HOMES EO 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 CAIRN HOMES i.e., CAIRN HOMES and Quaker Chemical go up and down completely randomly.
Pair Corralation between CAIRN HOMES and Quaker Chemical
Assuming the 90 days horizon CAIRN HOMES EO is expected to generate 1.08 times more return on investment than Quaker Chemical. However, CAIRN HOMES is 1.08 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 -0.02 per unit of risk. If you would invest 88.00 in CAIRN HOMES EO on October 11, 2024 and sell it today you would earn a total of 144.00 from holding CAIRN HOMES EO or generate 163.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
CAIRN HOMES EO vs. Quaker Chemical
Performance |
| Timeline |
| CAIRN HOMES EO |
| Quaker Chemical |
CAIRN HOMES and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAIRN HOMES and Quaker Chemical
The main advantage of trading using opposite CAIRN HOMES and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAIRN HOMES 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.| CAIRN HOMES vs. PLAYTIKA HOLDING DL 01 | CAIRN HOMES vs. DATAGROUP SE | CAIRN HOMES vs. PLAY2CHILL SA ZY | CAIRN HOMES vs. Gaming and Leisure |
| Quaker Chemical vs. DELTA AIR LINES | Quaker Chemical vs. WIZZ AIR HLDGUNSPADR4 | Quaker Chemical vs. CAIRN HOMES EO | Quaker Chemical vs. Beazer Homes USA |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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