Correlation Between Westrock Coffee and Chemours

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

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

Diversification Opportunities for Westrock Coffee and Chemours

0.58

Correlation Coefficient

Westrock Coffee  Chemours

Very weak diversification

The 3 months correlation between Westrock and Chemours is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee i.e., Westrock Coffee and Chemours go up and down completely randomly.

Pair Corralation between Westrock Coffee and Chemours

Given the investment horizon of 90 days Westrock Coffee is expected to under-perform the Chemours. In addition to that, Westrock Coffee is 1.06 times more volatile than Chemours Co. It trades about -0.01 of its total potential returns per unit of risk. Chemours Co is currently generating about -0.01 per unit of volatility. If you would invest  1,845  in Chemours Co on September 25, 2024 and sell it today you would lose (91.00) from holding Chemours Co or give up 4.93% of portfolio value over 90 days.

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

Westrock Coffee  vs.  Chemours Co

Westrock Coffee

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westrock Coffee has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Westrock Coffee is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private 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 rather sound fundamental indicators, Chemours is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Westrock Coffee and Chemours

The main advantage of trading using opposite Westrock Coffee and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee 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 Westrock Coffee 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.