Correlation Between Ashland Global and Quaker Chemical

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

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

Diversification Opportunities for Ashland Global and Quaker Chemical

0.17

Correlation Coefficient

Ashland Global  Quaker Chemical

Average diversification

The 3 months correlation between Ashland and Quaker is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ashland Global Holdings and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and Ashland Global 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 Ashland Global Holdings 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 Ashland Global i.e., Ashland Global and Quaker Chemical go up and down completely randomly.

Pair Corralation between Ashland Global and Quaker Chemical

Considering the 90-day investment horizon Ashland Global Holdings is expected to generate 0.98 times more return on investment than Quaker Chemical. However, Ashland Global Holdings is 1.02 times less risky than Quaker Chemical. It trades about -0.08 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.23 per unit of risk. If you would invest  9,659  in Ashland Global Holdings on February 2, 2024 and sell it today you would lose (209.00) from holding Ashland Global Holdings or give up 2.16% of portfolio value over 90 days.

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

Ashland Global Holdings  vs.  Quaker Chemical

Ashland Global Holdings

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ashland Global Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Ashland Global is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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 Ashland Global and Quaker Chemical

The main advantage of trading using opposite Ashland Global and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashland Global 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 Ashland Global Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..