Correlation Between Danimer Scientific and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Danimer Scientific 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 Danimer Scientific and Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danimer Scientific and Quaker Chemical, you can compare the effects of market volatilities on Danimer Scientific 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 Danimer Scientific with a short position of Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danimer Scientific and Quaker Chemical.
Diversification Opportunities for Danimer Scientific and Quaker Chemical
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Danimer and Quaker is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Danimer Scientific and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and Danimer Scientific 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 Danimer Scientific 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 Danimer Scientific i.e., Danimer Scientific and Quaker Chemical go up and down completely randomly.
Pair Corralation between Danimer Scientific and Quaker Chemical
Given the investment horizon of 90 days Danimer Scientific is expected to under-perform the Quaker Chemical. In addition to that, Danimer Scientific is 3.74 times more volatile than Quaker Chemical. It trades about -0.07 of its total potential returns per unit of risk. Quaker Chemical is currently generating about -0.02 per unit of volatility. If you would invest 18,558 in Quaker Chemical on October 20, 2024 and sell it today you would lose (4,921) from holding Quaker Chemical or give up 26.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.38% |
| Values | Daily Returns |
Danimer Scientific vs. Quaker Chemical
Performance |
| Timeline |
| Danimer Scientific |
| Quaker Chemical |
Danimer Scientific and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danimer Scientific and Quaker Chemical
The main advantage of trading using opposite Danimer Scientific and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danimer Scientific 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.| Danimer Scientific vs. LyondellBasell Industries NV | Danimer Scientific vs. International Flavors Fragrances | Danimer Scientific vs. Cabot | Danimer Scientific vs. Westlake Chemical |
| Quaker Chemical vs. Minerals Technologies | Quaker Chemical vs. Innospec | Quaker Chemical vs. H B Fuller | Quaker Chemical vs. Cabot |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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