Correlation Between CEMEX SAB and Lafargeholcim
Can any of the company-specific risk be diversified away by investing in both CEMEX SAB and Lafargeholcim 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 Lafargeholcim 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 Lafargeholcim Ltd ADR, you can compare the effects of market volatilities on CEMEX SAB and Lafargeholcim 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 Lafargeholcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEMEX SAB and Lafargeholcim.
Diversification Opportunities for CEMEX SAB and Lafargeholcim
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between CEMEX and Lafargeholcim is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding CEMEX SAB de and Lafargeholcim Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lafargeholcim ADR 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 Lafargeholcim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lafargeholcim ADR has no effect on the direction of CEMEX SAB i.e., CEMEX SAB and Lafargeholcim go up and down completely randomly.
Pair Corralation between CEMEX SAB and Lafargeholcim
Assuming the 90 days horizon CEMEX SAB de is expected to under-perform the Lafargeholcim. In addition to that, CEMEX SAB is 3.31 times more volatile than Lafargeholcim Ltd ADR. It trades about 0.0 of its total potential returns per unit of risk. Lafargeholcim Ltd ADR is currently generating about 0.1 per unit of volatility. If you would invest 1,439 in Lafargeholcim Ltd ADR on November 5, 2024 and sell it today you would earn a total of 583.00 from holding Lafargeholcim Ltd ADR or generate 40.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.15% |
| Values | Daily Returns |
CEMEX SAB de vs. Lafargeholcim Ltd ADR
Performance |
| Timeline |
| CEMEX SAB de |
| Lafargeholcim ADR |
CEMEX SAB and Lafargeholcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEMEX SAB and Lafargeholcim
The main advantage of trading using opposite CEMEX SAB and Lafargeholcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEMEX SAB position performs unexpectedly, Lafargeholcim 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 Lafargeholcim will offset losses from the drop in Lafargeholcim's long position.| CEMEX SAB vs. Vulcan Materials | CEMEX SAB vs. Martin Marietta Materials | CEMEX SAB vs. Eagle Materials | CEMEX SAB vs. CRH PLC ADR |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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