Correlation Between Chemours and Thunder Power
Can any of the company-specific risk be diversified away by investing in both Chemours and Thunder Power 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 Chemours and Thunder Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Thunder Power Holdings,, you can compare the effects of market volatilities on Chemours and Thunder Power 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 Chemours with a short position of Thunder Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Thunder Power.
Diversification Opportunities for Chemours and Thunder Power
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chemours and Thunder is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Thunder Power Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Power Holdings, and Chemours 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 Chemours Co are associated (or correlated) with Thunder Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Power Holdings, has no effect on the direction of Chemours i.e., Chemours and Thunder Power go up and down completely randomly.
Pair Corralation between Chemours and Thunder Power
Allowing for the 90-day total investment horizon Chemours is expected to generate 5.88 times less return on investment than Thunder Power. But when comparing it to its historical volatility, Chemours Co is 8.17 times less risky than Thunder Power. It trades about 0.13 of its potential returns per unit of risk. Thunder Power Holdings, is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Thunder Power Holdings, on September 4, 2024 and sell it today you would earn a total of 3.00 from holding Thunder Power Holdings, or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemours Co vs. Thunder Power Holdings,
Performance |
| Timeline |
| Chemours |
| Thunder Power Holdings, |
Chemours and Thunder Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and Thunder Power
The main advantage of trading using opposite Chemours and Thunder Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, Thunder Power 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 Thunder Power will offset losses from the drop in Thunder Power's long position.| Chemours vs. International Flavors Fragrances | Chemours vs. Air Products and | Chemours vs. PPG Industries | Chemours vs. Linde plc Ordinary |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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