Correlation Between HEXPOL AB and Chemours

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

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

Diversification Opportunities for HEXPOL AB and Chemours

-0.01

Correlation Coefficient

HEXPOL AB  Chemours

Good diversification

The 3 months correlation between HEXPOL and Chemours is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding HEXPOL AB and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and HEXPOL AB 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 HEXPOL AB are associated (or correlated) with Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of HEXPOL AB i.e., HEXPOL AB and Chemours go up and down completely randomly.

Pair Corralation between HEXPOL AB and Chemours

Assuming the 90 days horizon HEXPOL AB is expected to generate 0.63 times more return on investment than Chemours. However, HEXPOL AB is 1.58 times less risky than Chemours. It trades about -0.09 of its potential returns per unit of risk. Chemours Co is currently generating about -0.06 per unit of risk. If you would invest  1,004  in HEXPOL AB on September 28, 2024 and sell it today you would lose (118.00) from holding HEXPOL AB or give up 11.75% of portfolio value over 90 days.

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

HEXPOL AB  vs.  Chemours Co

HEXPOL AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 latest unfluctuating 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.

Pair Trading with HEXPOL AB and Chemours

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

The idea behind HEXPOL AB and Chemours Co 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.