Correlation Between Chemours and RELIANCE

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

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

Diversification Opportunities for Chemours and RELIANCE

0.3

Correlation Coefficient

Chemours  RELIANCE

Weak diversification

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

Pair Corralation between Chemours and RELIANCE

Allowing for the 90-day total investment horizon Chemours Co is expected to generate 0.82 times more return on investment than RELIANCE. However, Chemours Co is 1.22 times less risky than RELIANCE. It trades about -0.48 of its potential returns per unit of risk. RELIANCE STL ALUM is currently generating about -0.74 per unit of risk. If you would invest  2,128  in Chemours Co on October 5, 2024 and sell it today you would lose (457.00) from holding Chemours Co or give up 21.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	19.05%
Values	Daily Returns

Chemours Co  vs.  RELIANCE STL ALUM

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 fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

RELIANCE STL ALUM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RELIANCE STL ALUM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for RELIANCE STL ALUM investors.

Pair Trading with Chemours and RELIANCE

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

The idea behind Chemours Co and RELIANCE STL ALUM 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 CEOs Directory module to screen CEOs from public companies around the world.