Correlation Between Chemours and RPM International

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

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

Diversification Opportunities for Chemours and RPM International

0.61

Correlation Coefficient

Chemours  RPM International

Poor diversification

The 3 months correlation between Chemours and RPM is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and RPM International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPM International 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 RPM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPM International has no effect on the direction of Chemours i.e., Chemours and RPM International go up and down completely randomly.

Pair Corralation between Chemours and RPM International

Allowing for the 90-day total investment horizon Chemours Co is expected to generate 2.52 times more return on investment than RPM International. However, Chemours is 2.52 times more volatile than RPM International. It trades about 0.09 of its potential returns per unit of risk. RPM International is currently generating about 0.23 per unit of risk. If you would invest  1,839  in Chemours Co on September 1, 2024 and sell it today you would earn a total of  335.00  from holding Chemours Co or generate 18.22% 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.  RPM International

Chemours

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chemours Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Chemours exhibited solid returns over the last few months and may actually be approaching a breakup point.

RPM International

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RPM International are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, RPM International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chemours and RPM International

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

The idea behind Chemours Co and RPM International 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.