Correlation Between Chemours and Kronos Worldwide
Can any of the company-specific risk be diversified away by investing in both Chemours and Kronos Worldwide 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 Kronos Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Kronos Worldwide, you can compare the effects of market volatilities on Chemours and Kronos Worldwide 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 Kronos Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Kronos Worldwide.
Diversification Opportunities for Chemours and Kronos Worldwide
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chemours and Kronos is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Kronos Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Worldwide 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 Kronos Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Worldwide has no effect on the direction of Chemours i.e., Chemours and Kronos Worldwide go up and down completely randomly.
Pair Corralation between Chemours and Kronos Worldwide
Allowing for the 90-day total investment horizon Chemours Co is expected to generate 1.59 times more return on investment than Kronos Worldwide. However, Chemours is 1.59 times more volatile than Kronos Worldwide. It trades about 0.17 of its potential returns per unit of risk. Kronos Worldwide is currently generating about -0.02 per unit of risk. If you would invest 1,808 in Chemours Co on August 24, 2024 and sell it today you would earn a total of 272.00 from holding Chemours Co or generate 15.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemours Co vs. Kronos Worldwide
Performance |
| Timeline |
| Chemours |
| Kronos Worldwide |
Chemours and Kronos Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and Kronos Worldwide
The main advantage of trading using opposite Chemours and Kronos Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, Kronos Worldwide 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 Kronos Worldwide will offset losses from the drop in Kronos Worldwide'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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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