diversifiable risk of combining Chemours and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and United States Steel, you can compare the effects of market volatilities on Chemours and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and United States.
Diversification Opportunities for Chemours and United States
Pair Corralation between Chemours and United States
Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the United States. In addition to that, Chemours is 9.97 times more volatile than United States Steel. It trades about -0.19 of its total potential returns per unit of risk. United States Steel is currently generating about 0.11 per unit of volatility. If you would invest 4,658 in United States Steel on December 3, 2023 and sell it today you would earn a total of 82.00 from holding United States Steel or generate 1.76% return on investment over 90 days.
Chemours Co vs. United States Steel
Chemours and United States Volatility Contrast
Pair Trading with Chemours and United StatesThe main advantage of trading using opposite Chemours and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position. The idea behind Chemours Co and United States Steel 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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