Correlation Between Quanex Building and Perma Pipe

Can any of the company-specific risk be diversified away by investing in both Quanex Building and Perma Pipe 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 Perma Pipe 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 Perma Pipe International Holdings, you can compare the effects of market volatilities on Quanex Building and Perma Pipe 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 Perma Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanex Building and Perma Pipe.

Diversification Opportunities for Quanex Building and Perma Pipe

0.6

Correlation Coefficient

Quanex Building  Perma Pipe

Poor diversification

The 3 months correlation between Quanex and Perma is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Quanex Building Products and Perma Pipe International Holdi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Pipe Internati 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 Perma Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Pipe Internati has no effect on the direction of Quanex Building i.e., Quanex Building and Perma Pipe go up and down completely randomly.

Pair Corralation between Quanex Building and Perma Pipe

Allowing for the 90-day total investment horizon Quanex Building Products is expected to under-perform the Perma Pipe. But the stock apears to be less risky and, when comparing its historical volatility, Quanex Building Products is 1.12 times less risky than Perma Pipe. The stock trades about -0.11 of its potential returns per unit of risk. The Perma Pipe International Holdings is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,590  in Perma Pipe International Holdings on December 27, 2024 and sell it today you would lose (221.00) from holding Perma Pipe International Holdings or give up 13.9% of portfolio value over 90 days.

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

Quanex Building Products  vs.  Perma Pipe International Holdi

Quanex Building Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quanex Building Products 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Perma Pipe Internati

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perma Pipe International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Quanex Building and Perma Pipe

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

The idea behind Quanex Building Products and Perma Pipe International Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.