Correlation Between AviChina Industry and Quaker Chemical

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

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

Diversification Opportunities for AviChina Industry and Quaker Chemical

0.69

Correlation Coefficient

AviChina Industry  Quaker Chemical

Poor diversification

The 3 months correlation between AviChina and Quaker is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding AviChina Industry Technology and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and AviChina Industry 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 AviChina Industry Technology 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 AviChina Industry i.e., AviChina Industry and Quaker Chemical go up and down completely randomly.

Pair Corralation between AviChina Industry and Quaker Chemical

Assuming the 90 days horizon AviChina Industry Technology is expected to generate 1.23 times more return on investment than Quaker Chemical. However, AviChina Industry is 1.23 times more volatile than Quaker Chemical. It trades about 0.12 of its potential returns per unit of risk. Quaker Chemical is currently generating about 0.09 per unit of risk. If you would invest  40.00  in AviChina Industry Technology on April 24, 2025 and sell it today you would earn a total of  9.00  from holding AviChina Industry Technology or generate 22.5% return on investment over 90 days.

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

AviChina Industry Technology  vs.  Quaker Chemical

AviChina Industry

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AviChina Industry Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AviChina Industry reported solid returns over the last few months and may actually be approaching a breakup point.

Quaker Chemical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quaker Chemical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Quaker Chemical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AviChina Industry and Quaker Chemical

The main advantage of trading using opposite AviChina Industry and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AviChina Industry 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 AviChina Industry Technology 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.