Correlation Between Allegheny Technologies and Chemours

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

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

Diversification Opportunities for Allegheny Technologies and Chemours

0.31

Correlation Coefficient

Allegheny Technologies  Chemours

Weak diversification

The 3 months correlation between Allegheny and Chemours is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and Allegheny Technologies 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 Allegheny Technologies Incorporated 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 Allegheny Technologies i.e., Allegheny Technologies and Chemours go up and down completely randomly.

Pair Corralation between Allegheny Technologies and Chemours

Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to under-perform the Chemours. But the stock apears to be less risky and, when comparing its historical volatility, Allegheny Technologies Incorporated is 1.57 times less risky than Chemours. The stock trades about -0.04 of its potential returns per unit of risk. The Chemours Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,839  in Chemours Co on October 3, 2024 and sell it today you would lose (157.00) from holding Chemours Co or give up 8.54% of portfolio value over 90 days.

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

Allegheny Technologies Incorpo  vs.  Chemours Co

Allegheny Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegheny Technologies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Chemours

Risk-Adjusted Performance

0 of 100

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 latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Allegheny Technologies and Chemours

The main advantage of trading using opposite Allegheny Technologies and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies 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 Allegheny Technologies Incorporated 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.