Correlation Between Sociedad Quimica and Quaker Chemical

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

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

Diversification Opportunities for Sociedad Quimica and Quaker Chemical

0.24

Correlation Coefficient

Sociedad Quimica  Quaker Chemical

Modest diversification

The 3 months correlation between Sociedad and Quaker is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sociedad Quimica y and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and Sociedad Quimica 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 Sociedad Quimica y 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 Sociedad Quimica i.e., Sociedad Quimica and Quaker Chemical go up and down completely randomly.

Pair Corralation between Sociedad Quimica and Quaker Chemical

Considering the 90-day investment horizon Sociedad Quimica y is expected to generate 1.37 times more return on investment than Quaker Chemical. However, Sociedad Quimica is 1.37 times more volatile than Quaker Chemical. It trades about -0.06 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.57 per unit of risk. If you would invest  4,004  in Sociedad Quimica y on October 11, 2024 and sell it today you would lose (100.00) from holding Sociedad Quimica y or give up 2.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Sociedad Quimica y  vs.  Quaker Chemical

Sociedad Quimica y

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sociedad Quimica y has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Sociedad Quimica and Quaker Chemical

The main advantage of trading using opposite Sociedad Quimica and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sociedad Quimica 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 Sociedad Quimica y 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.