Correlation Between Chemours and Sika AG
Can any of the company-specific risk be diversified away by investing in both Chemours and Sika AG 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 Sika AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Sika AG, you can compare the effects of market volatilities on Chemours and Sika AG 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 Sika AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Sika AG.
Diversification Opportunities for Chemours and Sika AG
Very good diversification
The 3 months correlation between Chemours and Sika is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Sika AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sika AG 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 Sika AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sika AG has no effect on the direction of Chemours i.e., Chemours and Sika AG go up and down completely randomly.
Pair Corralation between Chemours and Sika AG
Allowing for the 90-day total investment horizon Chemours Co is expected to generate 1.04 times more return on investment than Sika AG. However, Chemours is 1.04 times more volatile than Sika AG. It trades about 0.01 of its potential returns per unit of risk. Sika AG is currently generating about -0.03 per unit of risk. If you would invest 1,907 in Chemours Co on September 15, 2024 and sell it today you would lose (3.00) from holding Chemours Co or give up 0.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemours Co vs. Sika AG
Performance |
| Timeline |
| Chemours |
| Sika AG |
Chemours and Sika AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and Sika AG
The main advantage of trading using opposite Chemours and Sika AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, Sika AG 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 Sika AG will offset losses from the drop in Sika AG's long position.| Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide | Chemours vs. LyondellBasell Industries NV |
| Sika AG vs. Chemours Co | Sika AG vs. International Flavors Fragrances | Sika AG vs. Air Products and | Sika AG vs. PPG Industries |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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