Correlation Between Quaker Chemical and SCOR SE

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

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

Diversification Opportunities for Quaker Chemical and SCOR SE

0.09

Correlation Coefficient

Quaker Chemical  SCOR SE

Significant diversification

The 3 months correlation between Quaker and SCOR is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and SCOR SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR SE 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 SCOR SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR SE has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and SCOR SE go up and down completely randomly.

Pair Corralation between Quaker Chemical and SCOR SE

Assuming the 90 days horizon Quaker Chemical is expected to under-perform the SCOR SE. In addition to that, Quaker Chemical is 1.02 times more volatile than SCOR SE. It trades about -0.48 of its total potential returns per unit of risk. SCOR SE is currently generating about -0.02 per unit of volatility. If you would invest  2,380  in SCOR SE on September 26, 2024 and sell it today you would lose (22.00) from holding SCOR SE or give up 0.92% of portfolio value over 90 days.

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

Quaker Chemical  vs.  SCOR SE

Quaker Chemical

Risk-Adjusted Performance

0 of 100

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.

SCOR SE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR SE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SCOR SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quaker Chemical and SCOR SE

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

The idea behind Quaker Chemical and SCOR SE 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.