Correlation Between Intrepid Potash and Chemours

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

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

Diversification Opportunities for Intrepid Potash and Chemours

-0.44

Correlation Coefficient

Intrepid Potash  Chemours

Very good diversification

The 3 months correlation between Intrepid and Chemours is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Intrepid Potash and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and Intrepid Potash 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 Intrepid Potash 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 Intrepid Potash i.e., Intrepid Potash and Chemours go up and down completely randomly.

Pair Corralation between Intrepid Potash and Chemours

Considering the 90-day investment horizon Intrepid Potash is expected to generate 0.65 times more return on investment than Chemours. However, Intrepid Potash is 1.55 times less risky than Chemours. It trades about 0.09 of its potential returns per unit of risk. Chemours Co is currently generating about 0.01 per unit of risk. If you would invest  1,893  in Intrepid Potash on January 26, 2024 and sell it today you would earn a total of  80.00  from holding Intrepid Potash or generate 4.23% return on investment over 90 days.

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

Intrepid Potash  vs.  Chemours Co

Intrepid Potash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intrepid Potash has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Intrepid Potash is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Intrepid Potash and Chemours

The main advantage of trading using opposite Intrepid Potash and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intrepid Potash 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 Intrepid Potash 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.