Correlation Between Quanex Building and Caesarstone

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

By analyzing existing cross correlation between Quanex Building Products and Caesarstone, you can compare the effects of market volatilities on Quanex Building and Caesarstone 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 Quanex Building with a short position of Caesarstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanex Building and Caesarstone.

Diversification Opportunities for Quanex Building and Caesarstone

-0.63

Correlation Coefficient

Quanex Building  Caesarstone

Excellent diversification

The 3 months correlation between Quanex and Caesarstone is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Quanex Building Products and Caesarstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesarstone and Quanex Building 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 Quanex Building Products are associated (or correlated) with Caesarstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caesarstone has no effect on the direction of Quanex Building i.e., Quanex Building and Caesarstone go up and down completely randomly.

Pair Corralation between Quanex Building and Caesarstone

Allowing for the 90-day total investment horizon Quanex Building Products is expected to generate 0.64 times more return on investment than Caesarstone. However, Quanex Building Products is 1.56 times less risky than Caesarstone. It trades about 0.08 of its potential returns per unit of risk. Caesarstone is currently generating about -0.01 per unit of risk. If you would invest  2,730  in Quanex Building Products on September 4, 2024 and sell it today you would earn a total of  173.00  from holding Quanex Building Products or generate 6.34% return on investment over 90 days.

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

Quanex Building Products  vs.  Caesarstone

Quanex Building Products

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Quanex Building Products are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Quanex Building showed solid returns over the last few months and may actually be approaching a breakup point.

Caesarstone

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caesarstone has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Quanex Building and Caesarstone

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

The idea behind Quanex Building Products and Caesarstone 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.