Correlation Between Chemours and Mazda

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Can any of the company-specific risk be diversified away by investing in both Chemours and Mazda 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 Mazda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Mazda Motor, you can compare the effects of market volatilities on Chemours and Mazda 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 Mazda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Mazda.

Diversification Opportunities for Chemours and Mazda

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Chemours and Mazda is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Mazda Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mazda Motor 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 Mazda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mazda Motor has no effect on the direction of Chemours i.e., Chemours and Mazda go up and down completely randomly.

Pair Corralation between Chemours and Mazda

Allowing for the 90-day total investment horizon Chemours Co is expected to generate 1.15 times more return on investment than Mazda. However, Chemours is 1.15 times more volatile than Mazda Motor. It trades about 0.06 of its potential returns per unit of risk. Mazda Motor is currently generating about -0.07 per unit of risk. If you would invest  1,781  in Chemours Co on September 14, 2024 and sell it today you would earn a total of  159.00  from holding Chemours Co or generate 8.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Chemours Co  vs.  Mazda Motor

 Performance 
       Timeline  
Chemours 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Chemours Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Chemours may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Mazda Motor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mazda Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Chemours and Mazda Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chemours and Mazda

The main advantage of trading using opposite Chemours and Mazda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, Mazda 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 Mazda will offset losses from the drop in Mazda's long position.
The idea behind Chemours Co and Mazda Motor 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 CEOs Directory module to screen CEOs from public companies around the world.

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