Correlation Between Celanese and Chemours

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

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

Diversification Opportunities for Celanese and Chemours

-0.31

Correlation Coefficient

Celanese  Chemours

Very good diversification

The 3 months correlation between Celanese and Chemours is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Celanese and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and Celanese 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 Celanese 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 Celanese i.e., Celanese and Chemours go up and down completely randomly.

Pair Corralation between Celanese and Chemours

Allowing for the 90-day total investment horizon Celanese is expected to under-perform the Chemours. But the stock apears to be less risky and, when comparing its historical volatility, Celanese is 2.17 times less risky than Chemours. The stock trades about -0.11 of its potential returns per unit of risk. The Chemours Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,780  in Chemours Co on January 18, 2024 and sell it today you would lose (139.00) from holding Chemours Co or give up 5.0% of portfolio value over 90 days.

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

Celanese  vs.  Chemours Co

Celanese

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Celanese are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Celanese may actually be approaching a critical reversion point that can send shares even higher in May 2024.

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.

Pair Trading with Celanese and Chemours

The main advantage of trading using opposite Celanese and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celanese 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 Celanese 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.