Correlation Between Arkema SA and Chemours

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

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

Diversification Opportunities for Arkema SA and Chemours

-0.15

Correlation Coefficient

Arkema SA  Chemours

Good diversification

The 3 months correlation between Arkema and Chemours is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Arkema SA ADR and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and Arkema SA 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 Arkema SA ADR 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 Arkema SA i.e., Arkema SA and Chemours go up and down completely randomly.

Pair Corralation between Arkema SA and Chemours

Assuming the 90 days horizon Arkema SA ADR is expected to generate 0.78 times more return on investment than Chemours. However, Arkema SA ADR is 1.29 times less risky than Chemours. It trades about 0.13 of its potential returns per unit of risk. Chemours Co is currently generating about -0.39 per unit of risk. If you would invest  7,760  in Arkema SA ADR on December 4, 2024 and sell it today you would earn a total of  468.00  from holding Arkema SA ADR or generate 6.03% return on investment over 90 days.

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

Arkema SA ADR  vs.  Chemours Co

Arkema SA ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arkema SA ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Arkema SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Arkema SA and Chemours

The main advantage of trading using opposite Arkema SA and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arkema SA 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 Arkema SA ADR 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.