Correlation Between Promotora and Chemours

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

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

Diversification Opportunities for Promotora and Chemours

-0.24

Correlation Coefficient

Promotora  Chemours

Very good diversification

The 3 months correlation between Promotora and Chemours is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora and The Chemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and Promotora 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 Promotora y Operadora 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 Promotora i.e., Promotora and Chemours go up and down completely randomly.

Pair Corralation between Promotora and Chemours

Assuming the 90 days trading horizon Promotora y Operadora is expected to generate 0.48 times more return on investment than Chemours. However, Promotora y Operadora is 2.1 times less risky than Chemours. It trades about 0.18 of its potential returns per unit of risk. The Chemours is currently generating about -0.18 per unit of risk. If you would invest  17,325  in Promotora y Operadora on December 24, 2024 and sell it today you would earn a total of  2,944  from holding Promotora y Operadora or generate 16.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Promotora y Operadora  vs.  The Chemours

Promotora y Operadora

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Promotora y Operadora are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Promotora sustained solid returns over the last few months and may actually be approaching a breakup point.

Chemours

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Chemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Promotora and Chemours

The main advantage of trading using opposite Promotora and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promotora 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 Promotora y Operadora and The Chemours 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.