Correlation Between Quaker Chemical and Oracle

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Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and Oracle 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 Oracle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and Oracle, you can compare the effects of market volatilities on Quaker Chemical and Oracle 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 Oracle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and Oracle.

Diversification Opportunities for Quaker Chemical and Oracle

0.6
  Correlation Coefficient

Poor diversification

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

Pair Corralation between Quaker Chemical and Oracle

Assuming the 90 days horizon Quaker Chemical is expected to generate 0.85 times more return on investment than Oracle. However, Quaker Chemical is 1.18 times less risky than Oracle. It trades about -0.58 of its potential returns per unit of risk. Oracle is currently generating about -0.54 per unit of risk. If you would invest  14,800  in Quaker Chemical on October 10, 2024 and sell it today you would lose (1,700) from holding Quaker Chemical or give up 11.49% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Quaker Chemical  vs.  Oracle

 Performance 
       Timeline  
Quaker Chemical 

Risk-Adjusted Performance

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Weak
 
Strong
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 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.
Oracle 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Oracle has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Oracle is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Quaker Chemical and Oracle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Quaker Chemical and Oracle

The main advantage of trading using opposite Quaker Chemical and Oracle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical position performs unexpectedly, Oracle 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 Oracle will offset losses from the drop in Oracle's long position.
The idea behind Quaker Chemical and Oracle 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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