Correlation Between Trinseo SA and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Trinseo SA 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 Trinseo SA and Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trinseo SA and Quaker Chemical, you can compare the effects of market volatilities on Trinseo SA 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 Trinseo SA with a short position of Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trinseo SA and Quaker Chemical.
Diversification Opportunities for Trinseo SA and Quaker Chemical
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Trinseo and Quaker is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Trinseo SA and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and Trinseo SA 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 Trinseo SA 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 Trinseo SA i.e., Trinseo SA and Quaker Chemical go up and down completely randomly.
Pair Corralation between Trinseo SA and Quaker Chemical
Considering the 90-day investment horizon Trinseo SA is expected to under-perform the Quaker Chemical. In addition to that, Trinseo SA is 1.8 times more volatile than Quaker Chemical. It trades about -0.04 of its total potential returns per unit of risk. Quaker Chemical is currently generating about 0.03 per unit of volatility. If you would invest 15,460 in Quaker Chemical on August 31, 2024 and sell it today you would earn a total of 126.00 from holding Quaker Chemical or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trinseo SA vs. Quaker Chemical
Performance |
| Timeline |
| Trinseo SA |
| Quaker Chemical |
Trinseo SA and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trinseo SA and Quaker Chemical
The main advantage of trading using opposite Trinseo SA and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trinseo SA 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.| Trinseo SA vs. Eastman Chemical | Trinseo SA vs. Linde plc Ordinary | Trinseo SA vs. Ecolab Inc | Trinseo SA vs. Sherwin Williams Co |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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