Correlation Between Chemours and Compania

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

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

Diversification Opportunities for Chemours and Compania

-0.2

Correlation Coefficient

Chemours  Compania

Good diversification

The 3 months correlation between Chemours and Compania is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Compania de Minas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Minas 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 Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Minas has no effect on the direction of Chemours i.e., Chemours and Compania go up and down completely randomly.

Pair Corralation between Chemours and Compania

Allowing for the 90-day total investment horizon Chemours Co is expected to generate 1.47 times more return on investment than Compania. However, Chemours is 1.47 times more volatile than Compania de Minas. It trades about -0.04 of its potential returns per unit of risk. Compania de Minas is currently generating about -0.1 per unit of risk. If you would invest  2,202  in Chemours Co on September 29, 2024 and sell it today you would lose (469.00) from holding Chemours Co or give up 21.3% of portfolio value over 90 days.

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

Chemours Co  vs.  Compania de Minas

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 unfluctuating 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.

Compania de Minas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compania de Minas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Chemours and Compania

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

The idea behind Chemours Co and Compania de Minas 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.