Correlation Between Quaker Chemical and DAIRY FARM
Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and DAIRY FARM 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 DAIRY FARM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and DAIRY FARM INTL, you can compare the effects of market volatilities on Quaker Chemical and DAIRY FARM 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 DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and DAIRY FARM.
Diversification Opportunities for Quaker Chemical and DAIRY FARM
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Quaker and DAIRY is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL 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 DAIRY FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIRY FARM INTL has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and DAIRY FARM go up and down completely randomly.
Pair Corralation between Quaker Chemical and DAIRY FARM
Assuming the 90 days horizon Quaker Chemical is expected to generate 1.13 times more return on investment than DAIRY FARM. However, Quaker Chemical is 1.13 times more volatile than DAIRY FARM INTL. It trades about 0.08 of its potential returns per unit of risk. DAIRY FARM INTL is currently generating about -0.1 per unit of risk. If you would invest 13,100 in Quaker Chemical on November 28, 2024 and sell it today you would earn a total of 400.00 from holding Quaker Chemical or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quaker Chemical vs. DAIRY FARM INTL
Performance |
| Timeline |
| Quaker Chemical |
| DAIRY FARM INTL |
Quaker Chemical and DAIRY FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quaker Chemical and DAIRY FARM
The main advantage of trading using opposite Quaker Chemical and DAIRY FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical position performs unexpectedly, DAIRY FARM 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 DAIRY FARM will offset losses from the drop in DAIRY FARM's long position.| Quaker Chemical vs. UET United Electronic | Quaker Chemical vs. METHODE ELECTRONICS | Quaker Chemical vs. Renesas Electronics | Quaker Chemical vs. Discover Financial Services |
| DAIRY FARM vs. CARSALESCOM | DAIRY FARM vs. Japan Medical Dynamic | DAIRY FARM vs. Genertec Universal Medical | DAIRY FARM vs. GEELY AUTOMOBILE |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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