Correlation Between CEMEX SAB and CEMATRIX

Can any of the company-specific risk be diversified away by investing in both CEMEX SAB and CEMATRIX 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 CEMATRIX 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 CEMATRIX, you can compare the effects of market volatilities on CEMEX SAB and CEMATRIX 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 CEMATRIX. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEMEX SAB and CEMATRIX.

Diversification Opportunities for CEMEX SAB and CEMATRIX

-0.15

Correlation Coefficient

CEMEX SAB  CEMATRIX

Good diversification

The 3 months correlation between CEMEX and CEMATRIX is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CEMEX SAB de and CEMATRIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEMATRIX 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 CEMATRIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEMATRIX has no effect on the direction of CEMEX SAB i.e., CEMEX SAB and CEMATRIX go up and down completely randomly.

Pair Corralation between CEMEX SAB and CEMATRIX

Assuming the 90 days horizon CEMEX SAB is expected to generate 7.5 times less return on investment than CEMATRIX. But when comparing it to its historical volatility, CEMEX SAB de is 1.01 times less risky than CEMATRIX. It trades about 0.02 of its potential returns per unit of risk. CEMATRIX is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  24.00  in CEMATRIX on February 27, 2024 and sell it today you would earn a total of  10.00  from holding CEMATRIX or generate 41.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

CEMEX SAB de  vs.  CEMATRIX

CEMEX SAB de

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CEMEX SAB de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CEMEX SAB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CEMATRIX

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CEMATRIX are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CEMATRIX reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CEMEX SAB and CEMATRIX

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

The idea behind CEMEX SAB de and CEMATRIX 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.