Correlation Between Chemours and Victrex Plc

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

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

Diversification Opportunities for Chemours and Victrex Plc

-0.28

Correlation Coefficient

Chemours  Victrex Plc

Very good diversification

The 3 months correlation between Chemours and Victrex is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Victrex plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victrex plc 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 Victrex Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victrex plc has no effect on the direction of Chemours i.e., Chemours and Victrex Plc go up and down completely randomly.

Pair Corralation between Chemours and Victrex Plc

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the Victrex Plc. But the stock apears to be less risky and, when comparing its historical volatility, Chemours Co is 2.69 times less risky than Victrex Plc. The stock trades about -0.48 of its potential returns per unit of risk. The Victrex plc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,026  in Victrex plc on September 28, 2024 and sell it today you would earn a total of  298.00  from holding Victrex plc or generate 29.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Chemours Co  vs.  Victrex plc

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 latest unfluctuating performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Victrex plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victrex plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Victrex Plc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chemours and Victrex Plc

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

The idea behind Chemours Co and Victrex plc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.