Correlation Between Chemours and Bayview Acquisition

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

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

Diversification Opportunities for Chemours and Bayview Acquisition

-0.09

Correlation Coefficient

Chemours  Bayview Acquisition

Good diversification

The 3 months correlation between Chemours and Bayview is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Bayview Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayview Acquisition Corp 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 Bayview Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayview Acquisition Corp has no effect on the direction of Chemours i.e., Chemours and Bayview Acquisition go up and down completely randomly.

Pair Corralation between Chemours and Bayview Acquisition

Allowing for the 90-day total investment horizon Chemours Co is expected to generate 7.38 times more return on investment than Bayview Acquisition. However, Chemours is 7.38 times more volatile than Bayview Acquisition Corp. It trades about 0.04 of its potential returns per unit of risk. Bayview Acquisition Corp is currently generating about -0.03 per unit of risk. If you would invest  1,845  in Chemours Co on October 22, 2024 and sell it today you would earn a total of  95.00  from holding Chemours Co or generate 5.15% return on investment over 90 days.

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

Chemours Co  vs.  Bayview Acquisition Corp

Chemours

Risk-Adjusted Performance

3 of 100

Weak

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 fragile fundamental indicators, Chemours may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bayview Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bayview Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bayview Acquisition is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Chemours and Bayview Acquisition

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

The idea behind Chemours Co and Bayview Acquisition Corp 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.