Correlation Between Chemours and Ternium SA
Can any of the company-specific risk be diversified away by investing in both Chemours and Ternium SA 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 Ternium SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Ternium SA ADR, you can compare the effects of market volatilities on Chemours and Ternium SA 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 Ternium SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Ternium SA.
Diversification Opportunities for Chemours and Ternium SA
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chemours and Ternium is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Ternium SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ternium SA ADR 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 Ternium SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ternium SA ADR has no effect on the direction of Chemours i.e., Chemours and Ternium SA go up and down completely randomly.
Pair Corralation between Chemours and Ternium SA
Allowing for the 90-day total investment horizon Chemours Co is expected to generate 2.12 times more return on investment than Ternium SA. However, Chemours is 2.12 times more volatile than Ternium SA ADR. It trades about 0.04 of its potential returns per unit of risk. Ternium SA ADR is currently generating about -0.03 per unit of risk. If you would invest 1,898 in Chemours Co on August 27, 2024 and sell it today you would earn a total of 255.00 from holding Chemours Co or generate 13.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemours Co vs. Ternium SA ADR
Performance |
| Timeline |
| Chemours |
| Ternium SA ADR |
Chemours and Ternium SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and Ternium SA
The main advantage of trading using opposite Chemours and Ternium SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, Ternium SA 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 Ternium SA will offset losses from the drop in Ternium SA's long position.| Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide | Chemours vs. LyondellBasell Industries NV |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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