Correlation Between Chemours and Koppers Holdings

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

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

Diversification Opportunities for Chemours and Koppers Holdings

0.72

Correlation Coefficient

Chemours  Koppers Holdings

Poor diversification

The 3 months correlation between Chemours and Koppers is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Koppers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koppers Holdings 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 Koppers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koppers Holdings has no effect on the direction of Chemours i.e., Chemours and Koppers Holdings go up and down completely randomly.

Pair Corralation between Chemours and Koppers Holdings

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the Koppers Holdings. In addition to that, Chemours is 1.48 times more volatile than Koppers Holdings. It trades about -0.02 of its total potential returns per unit of risk. Koppers Holdings is currently generating about 0.01 per unit of volatility. If you would invest  3,403  in Koppers Holdings on October 23, 2024 and sell it today you would lose (225.00) from holding Koppers Holdings or give up 6.61% 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.  Koppers Holdings

Chemours

Risk-Adjusted Performance

3 of 100

Insignificant

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.

Koppers Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koppers Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Chemours and Koppers Holdings

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

The idea behind Chemours Co and Koppers Holdings 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.