Correlation Between Chemours and Stardust Power

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

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

Diversification Opportunities for Chemours and Stardust Power

-0.3

Correlation Coefficient

Chemours  Stardust Power

Very good diversification

The 3 months correlation between Chemours and Stardust is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Stardust Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stardust Power 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 Stardust Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stardust Power has no effect on the direction of Chemours i.e., Chemours and Stardust Power go up and down completely randomly.

Pair Corralation between Chemours and Stardust Power

Allowing for the 90-day total investment horizon Chemours Co is expected to generate 0.23 times more return on investment than Stardust Power. However, Chemours Co is 4.27 times less risky than Stardust Power. It trades about 0.09 of its potential returns per unit of risk. Stardust Power is currently generating about -0.01 per unit of risk. If you would invest  1,829  in Chemours Co on September 4, 2024 and sell it today you would earn a total of  334.00  from holding Chemours Co or generate 18.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.13%
Values	Daily Returns

Chemours Co  vs.  Stardust Power

Chemours

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chemours Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Chemours exhibited solid returns over the last few months and may actually be approaching a breakup point.

Stardust Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stardust Power 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 stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Chemours and Stardust Power

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

The idea behind Chemours Co and Stardust Power 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.