Correlation Between Chemtrade Logistics and Arq

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

By analyzing existing cross correlation between Chemtrade Logistics Income and Arq Inc, you can compare the effects of market volatilities on Chemtrade Logistics and Arq 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 Chemtrade Logistics with a short position of Arq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemtrade Logistics and Arq.

Diversification Opportunities for Chemtrade Logistics and Arq

0.54

Correlation Coefficient

Chemtrade Logistics  Arq

Very weak diversification

The 3 months correlation between Chemtrade and Arq is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chemtrade Logistics Income and Arq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arq Inc and Chemtrade Logistics 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 Chemtrade Logistics Income are associated (or correlated) with Arq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arq Inc has no effect on the direction of Chemtrade Logistics i.e., Chemtrade Logistics and Arq go up and down completely randomly.

Pair Corralation between Chemtrade Logistics and Arq

Assuming the 90 days horizon Chemtrade Logistics Income is expected to under-perform the Arq. But the pink sheet apears to be less risky and, when comparing its historical volatility, Chemtrade Logistics Income is 2.04 times less risky than Arq. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Arq Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  593.00  in Arq Inc on October 25, 2024 and sell it today you would earn a total of  74.00  from holding Arq Inc or generate 12.48% return on investment over 90 days.

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

Chemtrade Logistics Income  vs.  Arq Inc

Chemtrade Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemtrade Logistics Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Arq Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arq Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Arq reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chemtrade Logistics and Arq

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

The idea behind Chemtrade Logistics Income and Arq Inc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.