Correlation Between Akzo Nobel and Chemours

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

By analyzing existing cross correlation between Akzo Nobel NV and Chemours Co, you can compare the effects of market volatilities on Akzo Nobel and Chemours 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 Akzo Nobel with a short position of Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akzo Nobel and Chemours.

Diversification Opportunities for Akzo Nobel and Chemours

-0.56

Correlation Coefficient

Akzo Nobel  Chemours

Excellent diversification

The 3 months correlation between Akzo and Chemours is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Akzo Nobel NV and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and Akzo Nobel 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 Akzo Nobel NV are associated (or correlated) with Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Akzo Nobel i.e., Akzo Nobel and Chemours go up and down completely randomly.

Pair Corralation between Akzo Nobel and Chemours

Assuming the 90 days horizon Akzo Nobel NV is expected to generate 0.82 times more return on investment than Chemours. However, Akzo Nobel NV is 1.22 times less risky than Chemours. It trades about 0.11 of its potential returns per unit of risk. Chemours Co is currently generating about -0.07 per unit of risk. If you would invest  5,751  in Akzo Nobel NV on December 27, 2024 and sell it today you would earn a total of  943.00  from holding Akzo Nobel NV or generate 16.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Akzo Nobel NV  vs.  Chemours Co

Akzo Nobel NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Akzo Nobel NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Akzo Nobel reported solid returns over the last few months and may actually be approaching a breakup point.

Chemours

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Akzo Nobel and Chemours

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

The idea behind Akzo Nobel NV and Chemours Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..