Correlation Between Quaker Chemical and Perimeter Solutions

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

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

Diversification Opportunities for Quaker Chemical and Perimeter Solutions

-0.41

Correlation Coefficient

Quaker Chemical  Perimeter Solutions

Very good diversification

The 3 months correlation between Quaker and Perimeter is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and Perimeter Solutions SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perimeter Solutions 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 Perimeter Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perimeter Solutions has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and Perimeter Solutions go up and down completely randomly.

Pair Corralation between Quaker Chemical and Perimeter Solutions

Considering the 90-day investment horizon Quaker Chemical is expected to generate 18.54 times less return on investment than Perimeter Solutions. But when comparing it to its historical volatility, Quaker Chemical is 1.58 times less risky than Perimeter Solutions. It trades about 0.03 of its potential returns per unit of risk. Perimeter Solutions SA is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  776.00  in Perimeter Solutions SA on July 2, 2024 and sell it today you would earn a total of  548.00  from holding Perimeter Solutions SA or generate 70.62% return on investment over 90 days.

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

Quaker Chemical  vs.  Perimeter Solutions SA

Quaker Chemical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quaker Chemical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Perimeter Solutions

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Perimeter Solutions SA are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Perimeter Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quaker Chemical and Perimeter Solutions

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

The idea behind Quaker Chemical and Perimeter Solutions SA 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.