Correlation Between Chemours and Vestis

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

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

Diversification Opportunities for Chemours and Vestis

0.35

Correlation Coefficient

Chemours  Vestis

Weak diversification

The 3 months correlation between Chemours and Vestis is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of Chemours i.e., Chemours and Vestis go up and down completely randomly.

Pair Corralation between Chemours and Vestis

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the Vestis. But the stock apears to be less risky and, when comparing its historical volatility, Chemours Co is 1.06 times less risky than Vestis. The stock trades about -0.05 of its potential returns per unit of risk. The Vestis is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,338  in Vestis on November 19, 2024 and sell it today you would earn a total of  31.00  from holding Vestis or generate 2.32% return on investment over 90 days.

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

Chemours Co  vs.  Vestis

Chemours

Risk-Adjusted Performance

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 latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Vestis

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vestis are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vestis is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Chemours and Vestis

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

The idea behind Chemours Co and Vestis 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..