Correlation Between China National and CEMEX SAB
Can any of the company-specific risk be diversified away by investing in both China National 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 China National and CEMEX SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China National Building and CEMEX SAB de, you can compare the effects of market volatilities on China National 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 China National with a short position of CEMEX SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of China National and CEMEX SAB.
Diversification Opportunities for China National and CEMEX SAB
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and CEMEX is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding China National Building 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 China National 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 China National Building 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 China National i.e., China National and CEMEX SAB go up and down completely randomly.
Pair Corralation between China National and CEMEX SAB
Assuming the 90 days horizon China National Building is expected to generate 1.07 times more return on investment than CEMEX SAB. However, China National is 1.07 times more volatile than CEMEX SAB de. It trades about 0.03 of its potential returns per unit of risk. CEMEX SAB de is currently generating about 0.0 per unit of risk. If you would invest 2,089 in China National Building on November 5, 2024 and sell it today you would earn a total of 336.00 from holding China National Building or generate 16.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.06% |
| Values | Daily Returns |
China National Building vs. CEMEX SAB de
Performance |
| Timeline |
| China National Building |
| CEMEX SAB de |
China National and CEMEX SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China National and CEMEX SAB
The main advantage of trading using opposite China National and CEMEX SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China National 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.| China National vs. Anhui Conch Cement | China National vs. Buzzi Unicem SpA | China National vs. Wienerberger Baustoffindustrie | China National vs. Lafargeholcim Ltd ADR |
| CEMEX SAB vs. Vulcan Materials | CEMEX SAB vs. Martin Marietta Materials | CEMEX SAB vs. Eagle Materials | CEMEX SAB vs. CRH PLC ADR |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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