Correlation Between Tronox Holdings and Sisecam Resources

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

By analyzing existing cross correlation between Tronox Holdings PLC and Sisecam Resources LP, you can compare the effects of market volatilities on Tronox Holdings and Sisecam Resources 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 Tronox Holdings with a short position of Sisecam Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tronox Holdings and Sisecam Resources.

Diversification Opportunities for Tronox Holdings and Sisecam Resources

-0.51

Correlation Coefficient

Tronox Holdings  Sisecam Resources

Excellent diversification

The 3 months correlation between Tronox and Sisecam is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tronox Holdings PLC and Sisecam Resources LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sisecam Resources and Tronox Holdings 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 Tronox Holdings PLC are associated (or correlated) with Sisecam Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sisecam Resources has no effect on the direction of Tronox Holdings i.e., Tronox Holdings and Sisecam Resources go up and down completely randomly.

Pair Corralation between Tronox Holdings and Sisecam Resources

Given the investment horizon of 90 days Tronox Holdings is expected to generate 8.34 times less return on investment than Sisecam Resources. In addition to that, Tronox Holdings is 2.74 times more volatile than Sisecam Resources LP. It trades about 0.01 of its total potential returns per unit of risk. Sisecam Resources LP is currently generating about 0.16 per unit of volatility. If you would invest  2,081  in Sisecam Resources LP on August 27, 2024 and sell it today you would earn a total of  452.00  from holding Sisecam Resources LP or generate 21.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	24.19%
Values	Daily Returns

Tronox Holdings PLC  vs.  Sisecam Resources LP

Tronox Holdings PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tronox Holdings PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Sisecam Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sisecam Resources LP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sisecam Resources is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tronox Holdings and Sisecam Resources

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

The idea behind Tronox Holdings PLC and Sisecam Resources LP 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.