Correlation Between Chemours and National CineMedia

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

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

Diversification Opportunities for Chemours and National CineMedia

0.12

Correlation Coefficient

Chemours  National CineMedia

Average diversification

The 3 months correlation between Chemours and National is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia 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 National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of Chemours i.e., Chemours and National CineMedia go up and down completely randomly.

Pair Corralation between Chemours and National CineMedia

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the National CineMedia. In addition to that, Chemours is 1.3 times more volatile than National CineMedia. It trades about -0.43 of its total potential returns per unit of risk. National CineMedia is currently generating about -0.07 per unit of volatility. If you would invest  691.00  in National CineMedia on September 24, 2024 and sell it today you would lose (19.00) from holding National CineMedia or give up 2.75% of portfolio value over 90 days.

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

Chemours Co  vs.  National CineMedia

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 rather sound fundamental indicators, Chemours is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

National CineMedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National CineMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, National CineMedia is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Chemours and National CineMedia

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

The idea behind Chemours Co and National CineMedia 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.