Correlation Between Chemours and LAir Liquide

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

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

Diversification Opportunities for Chemours and LAir Liquide

-0.55

Correlation Coefficient

Chemours  LAir Liquide

Excellent diversification

The 3 months correlation between Chemours and LAir is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and LAir Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAir Liquide SA and Chemours 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 Chemours Co are associated (or correlated) with LAir Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAir Liquide SA has no effect on the direction of Chemours i.e., Chemours and LAir Liquide go up and down completely randomly.

Pair Corralation between Chemours and LAir Liquide

Allowing for the 90-day total investment horizon Chemours Co is expected to generate 2.63 times more return on investment than LAir Liquide. However, Chemours is 2.63 times more volatile than LAir Liquide SA. It trades about 0.1 of its potential returns per unit of risk. LAir Liquide SA is currently generating about -0.14 per unit of risk. If you would invest  1,772  in Chemours Co on September 13, 2024 and sell it today you would earn a total of  345.00  from holding Chemours Co or generate 19.47% return on investment over 90 days.

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

Chemours Co  vs.  LAir Liquide SA

Chemours

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chemours Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Chemours exhibited solid returns over the last few months and may actually be approaching a breakup point.

LAir Liquide SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LAir Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Chemours and LAir Liquide

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

The idea behind Chemours Co and LAir Liquide SA 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.