Correlation Between GILEAD and Chemours

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

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

Diversification Opportunities for GILEAD and Chemours

0.56

Correlation Coefficient

GILEAD  Chemours

Very weak diversification

The 3 months correlation between GILEAD and Chemours is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding GILEAD SCIENCES INC and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and GILEAD 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 GILEAD SCIENCES INC 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 GILEAD i.e., GILEAD and Chemours go up and down completely randomly.

Pair Corralation between GILEAD and Chemours

Assuming the 90 days trading horizon GILEAD SCIENCES INC is expected to generate 0.06 times more return on investment than Chemours. However, GILEAD SCIENCES INC is 17.32 times less risky than Chemours. It trades about 0.03 of its potential returns per unit of risk. Chemours Co is currently generating about -0.02 per unit of risk. If you would invest  9,845  in GILEAD SCIENCES INC on October 9, 2024 and sell it today you would earn a total of  132.00  from holding GILEAD SCIENCES INC or generate 1.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

GILEAD SCIENCES INC  vs.  Chemours Co

GILEAD SCIENCES INC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GILEAD SCIENCES INC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, GILEAD is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 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.

Pair Trading with GILEAD and Chemours

The main advantage of trading using opposite GILEAD and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GILEAD 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 GILEAD SCIENCES INC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.