Correlation Between Chemours and Pixelworks

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

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

Diversification Opportunities for Chemours and Pixelworks

-0.36

Correlation Coefficient

Chemours  Pixelworks

Very good diversification

The 3 months correlation between Chemours and Pixelworks is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Pixelworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pixelworks 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 Pixelworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pixelworks has no effect on the direction of Chemours i.e., Chemours and Pixelworks go up and down completely randomly.

Pair Corralation between Chemours and Pixelworks

Allowing for the 90-day total investment horizon Chemours Co is expected to generate 1.1 times more return on investment than Pixelworks. However, Chemours is 1.1 times more volatile than Pixelworks. It trades about 0.01 of its potential returns per unit of risk. Pixelworks is currently generating about -0.6 per unit of risk. If you would invest  2,737  in Chemours Co on January 26, 2024 and sell it today you would lose (29.00) from holding Chemours Co or give up 1.06% of portfolio value over 90 days.

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

Chemours Co  vs.  Pixelworks

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.

Pixelworks

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pixelworks are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Pixelworks showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chemours and Pixelworks

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

The idea behind Chemours Co and Pixelworks 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.