Correlation Between Brenntag and Chemours

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

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

Diversification Opportunities for Brenntag and Chemours

-0.23

Correlation Coefficient

Brenntag  Chemours

Very good diversification

The 3 months correlation between Brenntag and Chemours is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Brenntag AG ADR and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and Brenntag 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 Brenntag AG 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 Brenntag i.e., Brenntag and Chemours go up and down completely randomly.

Pair Corralation between Brenntag and Chemours

Assuming the 90 days horizon Brenntag AG ADR is expected to under-perform the Chemours. But the pink sheet apears to be less risky and, when comparing its historical volatility, Brenntag AG ADR is 1.56 times less risky than Chemours. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Chemours Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,781  in Chemours Co on September 15, 2024 and sell it today you would earn a total of  123.00  from holding Chemours Co or generate 6.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Brenntag AG ADR  vs.  Chemours Co

Brenntag AG ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brenntag AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Brenntag is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Chemours

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chemours Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Chemours may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brenntag and Chemours

The main advantage of trading using opposite Brenntag and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brenntag 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 Brenntag AG 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.