Correlation Between INFORMATION SVC and Quaker Chemical

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

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

Diversification Opportunities for INFORMATION SVC and Quaker Chemical

-0.19

Correlation Coefficient

INFORMATION SVC  Quaker Chemical

Good diversification

The 3 months correlation between INFORMATION and Quaker is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and INFORMATION SVC 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 INFORMATION SVC GRP 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 INFORMATION SVC i.e., INFORMATION SVC and Quaker Chemical go up and down completely randomly.

Pair Corralation between INFORMATION SVC and Quaker Chemical

Assuming the 90 days horizon INFORMATION SVC GRP is expected to generate 1.2 times more return on investment than Quaker Chemical. However, INFORMATION SVC is 1.2 times more volatile than Quaker Chemical. It trades about 0.04 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.09 per unit of risk. If you would invest  320.00  in INFORMATION SVC GRP on December 22, 2024 and sell it today you would earn a total of  14.00  from holding INFORMATION SVC GRP or generate 4.38% return on investment over 90 days.

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

INFORMATION SVC GRP  vs.  Quaker Chemical

INFORMATION SVC GRP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INFORMATION SVC GRP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, INFORMATION SVC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the 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 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.

Pair Trading with INFORMATION SVC and Quaker Chemical

The main advantage of trading using opposite INFORMATION SVC and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFORMATION SVC 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 INFORMATION SVC GRP 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.