Correlation Between Cemex SAB and Quanex Building
Can any of the company-specific risk be diversified away by investing in both Cemex SAB and Quanex Building 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 Cemex SAB and Quanex Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cemex SAB de and Quanex Building Products, you can compare the effects of market volatilities on Cemex SAB and Quanex Building 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 Cemex SAB with a short position of Quanex Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cemex SAB and Quanex Building.
Diversification Opportunities for Cemex SAB and Quanex Building
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cemex and Quanex is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cemex SAB de and Quanex Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanex Building Products and Cemex SAB 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 Cemex SAB de are associated (or correlated) with Quanex Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanex Building Products has no effect on the direction of Cemex SAB i.e., Cemex SAB and Quanex Building go up and down completely randomly.
Pair Corralation between Cemex SAB and Quanex Building
Allowing for the 90-day total investment horizon Cemex SAB de is expected to generate 0.82 times more return on investment than Quanex Building. However, Cemex SAB de is 1.22 times less risky than Quanex Building. It trades about -0.23 of its potential returns per unit of risk. Quanex Building Products is currently generating about -0.27 per unit of risk. If you would invest 880.00 in Cemex SAB de on January 26, 2024 and sell it today you would lose (68.00) from holding Cemex SAB de or give up 7.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cemex SAB de vs. Quanex Building Products
Performance |
| Timeline |
| Cemex SAB de |
| Quanex Building Products |
Cemex SAB and Quanex Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cemex SAB and Quanex Building
The main advantage of trading using opposite Cemex SAB and Quanex Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cemex SAB position performs unexpectedly, Quanex Building 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 Quanex Building will offset losses from the drop in Quanex Building's long position.| Cemex SAB vs. United States Lime | Cemex SAB vs. Holcim | Cemex SAB vs. Lafargeholcim Ltd ADR | Cemex SAB vs. Vulcan Materials |
| Quanex Building vs. Jeld Wen Holding | Quanex Building vs. Perma Pipe International Holdings | Quanex Building vs. Interface | Quanex Building vs. Janus International Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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