Correlation Between Perusahaan Perseroan and Quaker Chemical

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

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

Diversification Opportunities for Perusahaan Perseroan and Quaker Chemical

0.64

Correlation Coefficient

Perusahaan Perseroan  Quaker Chemical

Poor diversification

The 3 months correlation between Perusahaan and Quaker is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perseroan PT and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and Perusahaan Perseroan 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 Perusahaan Perseroan PT 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 Perusahaan Perseroan i.e., Perusahaan Perseroan and Quaker Chemical go up and down completely randomly.

Pair Corralation between Perusahaan Perseroan and Quaker Chemical

Assuming the 90 days horizon Perusahaan Perseroan PT is expected to under-perform the Quaker Chemical. In addition to that, Perusahaan Perseroan is 1.0 times more volatile than Quaker Chemical. It trades about -0.09 of its total potential returns per unit of risk. Quaker Chemical is currently generating about -0.08 per unit of volatility. If you would invest  13,250  in Quaker Chemical on December 30, 2024 and sell it today you would lose (1,350) from holding Quaker Chemical or give up 10.19% of portfolio value over 90 days.

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

Perusahaan Perseroan PT  vs.  Quaker Chemical

Perusahaan Perseroan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perusahaan Perseroan PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Perusahaan Perseroan and Quaker Chemical

The main advantage of trading using opposite Perusahaan Perseroan and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perusahaan Perseroan 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 Perusahaan Perseroan PT 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.