Correlation Between Quaker Chemical and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and NexGen Energy 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 Quaker Chemical and NexGen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and NexGen Energy, you can compare the effects of market volatilities on Quaker Chemical and NexGen Energy 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 Quaker Chemical with a short position of NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and NexGen Energy.
Diversification Opportunities for Quaker Chemical and NexGen Energy
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Quaker and NexGen is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy and Quaker Chemical 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 Quaker Chemical are associated (or correlated) with NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and NexGen Energy go up and down completely randomly.
Pair Corralation between Quaker Chemical and NexGen Energy
Assuming the 90 days horizon Quaker Chemical is expected to under-perform the NexGen Energy. But the stock apears to be less risky and, when comparing its historical volatility, Quaker Chemical is 2.65 times less risky than NexGen Energy. The stock trades about -0.27 of its potential returns per unit of risk. The NexGen Energy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 670.00 in NexGen Energy on September 13, 2024 and sell it today you would earn a total of 80.00 from holding NexGen Energy or generate 11.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quaker Chemical vs. NexGen Energy
Performance |
| Timeline |
| Quaker Chemical |
| NexGen Energy |
Quaker Chemical and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quaker Chemical and NexGen Energy
The main advantage of trading using opposite Quaker Chemical and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical position performs unexpectedly, NexGen Energy 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 NexGen Energy will offset losses from the drop in NexGen Energy's long position.| Quaker Chemical vs. ScanSource | Quaker Chemical vs. BlueScope Steel Limited | Quaker Chemical vs. KRAKATAU STEEL B | Quaker Chemical vs. Khiron Life Sciences |
| NexGen Energy vs. Food Life Companies | NexGen Energy vs. Austevoll Seafood ASA | NexGen Energy vs. Cogent Communications Holdings | NexGen Energy vs. Shenandoah Telecommunications |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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