Correlation Between Chemours and Novozymes
Can any of the company-specific risk be diversified away by investing in both Chemours and Novozymes 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 Novozymes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Novozymes AS, you can compare the effects of market volatilities on Chemours and Novozymes 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 Novozymes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Novozymes.
Diversification Opportunities for Chemours and Novozymes
Very good diversification
The 3 months correlation between Chemours and Novozymes is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Novozymes AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novozymes AS 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 Novozymes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novozymes AS has no effect on the direction of Chemours i.e., Chemours and Novozymes go up and down completely randomly.
Pair Corralation between Chemours and Novozymes
Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the Novozymes. In addition to that, Chemours is 2.52 times more volatile than Novozymes AS. It trades about -0.03 of its total potential returns per unit of risk. Novozymes AS is currently generating about 0.04 per unit of volatility. If you would invest 5,298 in Novozymes AS on September 14, 2024 and sell it today you would earn a total of 593.00 from holding Novozymes AS or generate 11.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Chemours Co vs. Novozymes AS
Performance |
| Timeline |
| Chemours |
| Novozymes AS |
Chemours and Novozymes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and Novozymes
The main advantage of trading using opposite Chemours and Novozymes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, Novozymes 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 Novozymes will offset losses from the drop in Novozymes' long position.| Chemours vs. Eastman Chemical | Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide |
| Novozymes vs. Air Liquide SA | Novozymes vs. PPG Industries | Novozymes vs. Sherwin Williams Co | Novozymes vs. Air Products and |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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