Correlation Between Danimer Scientific and Chemours

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

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

Diversification Opportunities for Danimer Scientific and Chemours

-0.56

Correlation Coefficient

Danimer Scientific  Chemours

Excellent diversification

The 3 months correlation between Danimer and Chemours is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Danimer Scientific and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and Danimer Scientific 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 Danimer Scientific 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 Danimer Scientific i.e., Danimer Scientific and Chemours go up and down completely randomly.

Pair Corralation between Danimer Scientific and Chemours

Given the investment horizon of 90 days Danimer Scientific is expected to under-perform the Chemours. In addition to that, Danimer Scientific is 2.52 times more volatile than Chemours Co. It trades about -0.19 of its total potential returns per unit of risk. Chemours Co is currently generating about 0.06 per unit of volatility. If you would invest  1,772  in Chemours Co on September 13, 2024 and sell it today you would earn a total of  168.00  from holding Chemours Co or generate 9.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Danimer Scientific  vs.  Chemours Co

Danimer Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danimer Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Chemours

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chemours Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Chemours may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Danimer Scientific and Chemours

The main advantage of trading using opposite Danimer Scientific and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danimer Scientific 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 Danimer Scientific and Chemours Co 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.