Correlation Between Quaker Chemical and SHIN ETSU

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Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and SHIN ETSU 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 SHIN ETSU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and SHIN ETSU CHEMICAL, you can compare the effects of market volatilities on Quaker Chemical and SHIN ETSU 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 SHIN ETSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and SHIN ETSU.

Diversification Opportunities for Quaker Chemical and SHIN ETSU

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Quaker and SHIN is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and SHIN ETSU CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIN ETSU CHEMICAL 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 SHIN ETSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIN ETSU CHEMICAL has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and SHIN ETSU go up and down completely randomly.

Pair Corralation between Quaker Chemical and SHIN ETSU

Assuming the 90 days horizon Quaker Chemical is expected to generate 1.57 times more return on investment than SHIN ETSU. However, Quaker Chemical is 1.57 times more volatile than SHIN ETSU CHEMICAL. It trades about 0.1 of its potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about 0.15 per unit of risk. If you would invest  8,615  in Quaker Chemical on April 20, 2025 and sell it today you would earn a total of  1,385  from holding Quaker Chemical or generate 16.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Quaker Chemical  vs.  SHIN ETSU CHEMICAL

 Performance 
       Timeline  
Quaker Chemical 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Quaker Chemical are ranked lower than 8 (%) 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.
SHIN ETSU CHEMICAL 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in SHIN ETSU CHEMICAL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, SHIN ETSU unveiled solid returns over the last few months and may actually be approaching a breakup point.

Quaker Chemical and SHIN ETSU Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Quaker Chemical and SHIN ETSU

The main advantage of trading using opposite Quaker Chemical and SHIN ETSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical position performs unexpectedly, SHIN ETSU 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 SHIN ETSU will offset losses from the drop in SHIN ETSU's long position.
The idea behind Quaker Chemical and SHIN ETSU 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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