Correlation Between Chemours and Olin
Can any of the company-specific risk be diversified away by investing in both Chemours and Olin 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 Olin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Olin Corporation, you can compare the effects of market volatilities on Chemours and Olin 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 Olin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Olin.
Diversification Opportunities for Chemours and Olin
Very weak diversification
The 3 months correlation between Chemours and Olin is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Olin Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olin 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 Olin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olin has no effect on the direction of Chemours i.e., Chemours and Olin go up and down completely randomly.
Pair Corralation between Chemours and Olin
Allowing for the 90-day total investment horizon Chemours Co is expected to generate 2.32 times more return on investment than Olin. However, Chemours is 2.32 times more volatile than Olin Corporation. It trades about 0.21 of its potential returns per unit of risk. Olin Corporation is currently generating about 0.11 per unit of risk. If you would invest 1,808 in Chemours Co on August 26, 2024 and sell it today you would earn a total of 345.00 from holding Chemours Co or generate 19.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemours Co vs. Olin Corp.
Performance |
| Timeline |
| Chemours |
| Olin |
Chemours and Olin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and Olin
The main advantage of trading using opposite Chemours and Olin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, Olin 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 Olin will offset losses from the drop in Olin's long position.| Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide | Chemours vs. LyondellBasell Industries NV |
| Olin vs. Select Energy Services | Olin vs. Westlake Chemical | Olin vs. Sensient Technologies | Olin vs. Axalta Coating Systems |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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