Correlation Between AAON and Cemex SAB
Can any of the company-specific risk be diversified away by investing in both AAON and Cemex SAB 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 AAON and Cemex SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAON Inc and Cemex SAB de, you can compare the effects of market volatilities on AAON and Cemex SAB 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 AAON with a short position of Cemex SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAON and Cemex SAB.
Diversification Opportunities for AAON and Cemex SAB
Very weak diversification
The 3 months correlation between AAON and Cemex is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding AAON Inc and Cemex SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemex SAB de and AAON 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 AAON Inc are associated (or correlated) with Cemex SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemex SAB de has no effect on the direction of AAON i.e., AAON and Cemex SAB go up and down completely randomly.
Pair Corralation between AAON and Cemex SAB
Given the investment horizon of 90 days AAON Inc is expected to generate 0.92 times more return on investment than Cemex SAB. However, AAON Inc is 1.09 times less risky than Cemex SAB. It trades about 0.2 of its potential returns per unit of risk. Cemex SAB de is currently generating about 0.12 per unit of risk. If you would invest 5,342 in AAON Inc on January 20, 2024 and sell it today you would earn a total of 3,199 from holding AAON Inc or generate 59.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAON Inc vs. Cemex SAB de
Performance |
| Timeline |
| AAON Inc |
| Cemex SAB de |
AAON and Cemex SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAON and Cemex SAB
The main advantage of trading using opposite AAON and Cemex SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAON position performs unexpectedly, Cemex SAB 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 Cemex SAB will offset losses from the drop in Cemex SAB's long position.| AAON vs. Travis Perkins plc | AAON vs. Travis Perkins PLC | AAON vs. Janus International Group | AAON vs. Interface |
| Cemex SAB vs. Martin Marietta Materials | Cemex SAB vs. CRH PLC ADR | Cemex SAB vs. Eagle Materials | Cemex SAB vs. Summit Materials |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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