Correlation Between Nanophase Technol and Quaker Chemical

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

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

Diversification Opportunities for Nanophase Technol and Quaker Chemical

-0.24

Correlation Coefficient

Nanophase Technol  Quaker Chemical

Very good diversification

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

Pair Corralation between Nanophase Technol and Quaker Chemical

Given the investment horizon of 90 days Nanophase Technol is expected to generate 4.07 times more return on investment than Quaker Chemical. However, Nanophase Technol is 4.07 times more volatile than Quaker Chemical. It trades about 0.05 of its potential returns per unit of risk. Quaker Chemical is currently generating about 0.0 per unit of risk. If you would invest  116.00  in Nanophase Technol on September 14, 2024 and sell it today you would earn a total of  24.00  from holding Nanophase Technol or generate 20.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	29.15%
Values	Daily Returns

Nanophase Technol  vs.  Quaker Chemical

Nanophase Technol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nanophase Technol has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Nanophase Technol is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 relatively invariable basic indicators, Quaker Chemical is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Nanophase Technol and Quaker Chemical

The main advantage of trading using opposite Nanophase Technol and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanophase Technol 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 Nanophase Technol 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .