Correlation Between Chemours and Ecovyst

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

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

Diversification Opportunities for Chemours and Ecovyst

0.78

Correlation Coefficient

Chemours  Ecovyst

Poor diversification

The 3 months correlation between Chemours and Ecovyst is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst 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 Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of Chemours i.e., Chemours and Ecovyst go up and down completely randomly.

Pair Corralation between Chemours and Ecovyst

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the Ecovyst. In addition to that, Chemours is 1.17 times more volatile than Ecovyst. It trades about -0.06 of its total potential returns per unit of risk. Ecovyst is currently generating about -0.07 per unit of volatility. If you would invest  750.00  in Ecovyst on December 29, 2024 and sell it today you would lose (96.00) from holding Ecovyst or give up 12.8% 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.  Ecovyst

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 latest fragile 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.

Ecovyst

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ecovyst has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Chemours and Ecovyst

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

The idea behind Chemours Co and Ecovyst 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.