Correlation Between 5E Advanced and Quaker Chemical

Can any of the company-specific risk be diversified away by investing in both 5E Advanced 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 5E Advanced and Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 5E Advanced Materials and Quaker Chemical, you can compare the effects of market volatilities on 5E Advanced 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 5E Advanced with a short position of Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of 5E Advanced and Quaker Chemical.

Diversification Opportunities for 5E Advanced and Quaker Chemical

-0.25

Correlation Coefficient

5E Advanced  Quaker Chemical

Very good diversification

The 3 months correlation between FEAM and Quaker is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding 5E Advanced Materials and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and 5E Advanced 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 5E Advanced Materials 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 5E Advanced i.e., 5E Advanced and Quaker Chemical go up and down completely randomly.

Pair Corralation between 5E Advanced and Quaker Chemical

Given the investment horizon of 90 days 5E Advanced Materials is expected to under-perform the Quaker Chemical. In addition to that, 5E Advanced is 4.08 times more volatile than Quaker Chemical. It trades about -0.02 of its total potential returns per unit of risk. Quaker Chemical is currently generating about -0.04 per unit of volatility. If you would invest  17,081  in Quaker Chemical on October 11, 2024 and sell it today you would lose (3,956) from holding Quaker Chemical or give up 23.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

5E Advanced Materials  vs.  Quaker Chemical

5E Advanced Materials

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 5E Advanced Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, 5E Advanced displayed solid returns over the last few months and may actually be approaching a breakup point.

Quaker Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quaker Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with 5E Advanced and Quaker Chemical

The main advantage of trading using opposite 5E Advanced and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 5E Advanced 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.

The idea behind 5E Advanced Materials and Quaker Chemical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 CEOs Directory module to screen CEOs from public companies around the world.