Correlation Between Chemours and Mountain Crest

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

By analyzing existing cross correlation between Chemours Co and Mountain Crest Acquisition, you can compare the effects of market volatilities on Chemours and Mountain Crest 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 Mountain Crest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Mountain Crest.

Diversification Opportunities for Chemours and Mountain Crest

-0.24

Correlation Coefficient

Chemours  Mountain Crest

Very good diversification

The 3 months correlation between Chemours and Mountain is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Mountain Crest Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain Crest Acqui 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 Mountain Crest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain Crest Acqui has no effect on the direction of Chemours i.e., Chemours and Mountain Crest go up and down completely randomly.

Pair Corralation between Chemours and Mountain Crest

Allowing for the 90-day total investment horizon Chemours Co is expected to generate 0.16 times more return on investment than Mountain Crest. However, Chemours Co is 6.07 times less risky than Mountain Crest. It trades about -0.01 of its potential returns per unit of risk. Mountain Crest Acquisition is currently generating about -0.22 per unit of risk. If you would invest  2,833  in Chemours Co on September 21, 2024 and sell it today you would lose (1,061) from holding Chemours Co or give up 37.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	9.48%
Values	Daily Returns

Chemours Co  vs.  Mountain Crest Acquisition

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Chemours is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Mountain Crest Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mountain Crest Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Mountain Crest is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Chemours and Mountain Crest

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

The idea behind Chemours Co and Mountain Crest Acquisition 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.