Correlation Between Cemex SAB and Holcim
Can any of the company-specific risk be diversified away by investing in both Cemex SAB and Holcim 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 Holcim 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 Holcim, you can compare the effects of market volatilities on Cemex SAB and Holcim 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 Holcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cemex SAB and Holcim.
Diversification Opportunities for Cemex SAB and Holcim
Good diversification
The 3 months correlation between Cemex and Holcim is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cemex SAB de and Holcim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim 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 Holcim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holcim has no effect on the direction of Cemex SAB i.e., Cemex SAB and Holcim go up and down completely randomly.
Pair Corralation between Cemex SAB and Holcim
Allowing for the 90-day total investment horizon Cemex SAB de is expected to generate 2.09 times more return on investment than Holcim. However, Cemex SAB is 2.09 times more volatile than Holcim. It trades about 0.06 of its potential returns per unit of risk. Holcim is currently generating about 0.11 per unit of risk. If you would invest 525.00 in Cemex SAB de on August 30, 2024 and sell it today you would earn a total of 18.00 from holding Cemex SAB de or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cemex SAB de vs. Holcim
Performance |
| Timeline |
| Cemex SAB de |
| Holcim |
Cemex SAB and Holcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cemex SAB and Holcim
The main advantage of trading using opposite Cemex SAB and Holcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cemex SAB position performs unexpectedly, Holcim 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 Holcim will offset losses from the drop in Holcim's long position.| Cemex SAB vs. Martin Marietta Materials | Cemex SAB vs. CRH PLC ADR | Cemex SAB vs. Eagle Materials | Cemex SAB vs. Summit Materials |
| Holcim vs. HeidelbergCement AG ADR | Holcim vs. Anhui Conch Cement | Holcim vs. Buzzi Unicem SpA | Holcim vs. Wienerberger Baustoffindustrie |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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