Correlation Between ALPEK SAB and Chemours

Can any of the company-specific risk be diversified away by investing in both ALPEK SAB and Chemours 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 ALPEK SAB and Chemours into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALPEK SAB de and The Chemours, you can compare the effects of market volatilities on ALPEK SAB and Chemours 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 ALPEK SAB with a short position of Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALPEK SAB and Chemours.

Diversification Opportunities for ALPEK SAB and Chemours

0.64

Correlation Coefficient

ALPEK SAB  Chemours

Poor diversification

The 3 months correlation between ALPEK and Chemours is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ALPEK SAB de and The Chemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and ALPEK SAB 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 ALPEK SAB de are associated (or correlated) with Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of ALPEK SAB i.e., ALPEK SAB and Chemours go up and down completely randomly.

Pair Corralation between ALPEK SAB and Chemours

Assuming the 90 days trading horizon ALPEK SAB de is expected to under-perform the Chemours. In addition to that, ALPEK SAB is 1.5 times more volatile than The Chemours. It trades about -0.1 of its total potential returns per unit of risk. The Chemours is currently generating about 0.22 per unit of volatility. If you would invest  38,507  in The Chemours on September 26, 2024 and sell it today you would earn a total of  2,383  from holding The Chemours or generate 6.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ALPEK SAB de  vs.  The Chemours

ALPEK SAB de

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ALPEK SAB de are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ALPEK SAB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Chemours

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Chemours are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Chemours showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALPEK SAB and Chemours

The main advantage of trading using opposite ALPEK SAB and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALPEK SAB position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.

The idea behind ALPEK SAB de and The Chemours pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.