Correlation Between Lafargeholcim and Cemex SAB
Can any of the company-specific risk be diversified away by investing in both Lafargeholcim 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 Lafargeholcim and Cemex SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lafargeholcim Ltd ADR and Cemex SAB de, you can compare the effects of market volatilities on Lafargeholcim 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 Lafargeholcim with a short position of Cemex SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lafargeholcim and Cemex SAB.
Diversification Opportunities for Lafargeholcim and Cemex SAB
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lafargeholcim and Cemex is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lafargeholcim Ltd ADR 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 Lafargeholcim 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 Lafargeholcim Ltd ADR 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 Lafargeholcim i.e., Lafargeholcim and Cemex SAB go up and down completely randomly.
Pair Corralation between Lafargeholcim and Cemex SAB
Assuming the 90 days horizon Lafargeholcim Ltd ADR is expected to generate 0.38 times more return on investment than Cemex SAB. However, Lafargeholcim Ltd ADR is 2.64 times less risky than Cemex SAB. It trades about 0.22 of its potential returns per unit of risk. Cemex SAB de is currently generating about -0.09 per unit of risk. If you would invest 1,906 in Lafargeholcim Ltd ADR on August 26, 2024 and sell it today you would earn a total of 121.00 from holding Lafargeholcim Ltd ADR or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lafargeholcim Ltd ADR vs. Cemex SAB de
Performance |
| Timeline |
| Lafargeholcim ADR |
| Cemex SAB de |
Lafargeholcim and Cemex SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lafargeholcim and Cemex SAB
The main advantage of trading using opposite Lafargeholcim and Cemex SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lafargeholcim 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.| Lafargeholcim vs. Anhui Conch Cement | Lafargeholcim vs. Buzzi Unicem SpA | Lafargeholcim vs. Wienerberger Baustoffindustrie | Lafargeholcim vs. China National Building |
| Cemex SAB vs. Holcim | Cemex SAB vs. Lafargeholcim Ltd ADR | Cemex SAB vs. Eagle Materials | Cemex SAB vs. The Monarch Cement |
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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