Correlation Between Quaker Chemical and Hawkins

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

By analyzing existing cross correlation between Quaker Chemical and Hawkins, you can compare the effects of market volatilities on Quaker Chemical and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and Hawkins.

Diversification Opportunities for Quaker Chemical and Hawkins

0.28

Correlation Coefficient

Quaker Chemical  Hawkins

Modest diversification

The 3 months correlation between Quaker and Hawkins is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and Hawkins go up and down completely randomly.

Pair Corralation between Quaker Chemical and Hawkins

Considering the 90-day investment horizon Quaker Chemical is expected to generate 0.82 times more return on investment than Hawkins. However, Quaker Chemical is 1.22 times less risky than Hawkins. It trades about -0.05 of its potential returns per unit of risk. Hawkins is currently generating about -0.09 per unit of risk. If you would invest  13,959  in Quaker Chemical on December 29, 2024 and sell it today you would lose (980.00) from holding Quaker Chemical or give up 7.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Quaker Chemical  vs.  Hawkins

Quaker Chemical

Risk-Adjusted Performance

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 relatively invariable basic indicators, Quaker Chemical is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Hawkins

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hawkins has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Quaker Chemical and Hawkins

The main advantage of trading using opposite Quaker Chemical and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.

The idea behind Quaker Chemical and Hawkins 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.