Correlation Between Chemours and Albemarle

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

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

Diversification Opportunities for Chemours and Albemarle

0.75

Correlation Coefficient

Chemours  Albemarle

Poor diversification

The 3 months correlation between Chemours and Albemarle is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle 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 Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of Chemours i.e., Chemours and Albemarle go up and down completely randomly.

Pair Corralation between Chemours and Albemarle

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the Albemarle. In addition to that, Chemours is 1.4 times more volatile than Albemarle. It trades about -0.08 of its total potential returns per unit of risk. Albemarle is currently generating about -0.06 per unit of volatility. If you would invest  3,971  in Albemarle on December 30, 2024 and sell it today you would lose (375.00) from holding Albemarle or give up 9.44% of portfolio value over 90 days.

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

Chemours Co  vs.  Albemarle

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.

Albemarle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Albemarle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Chemours and Albemarle

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

The idea behind Chemours Co and Albemarle 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.