Correlation Between Compaa Minera and Martin Marietta

Can any of the company-specific risk be diversified away by investing in both Compaa Minera and Martin Marietta 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 Compaa Minera and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Compaa Minera Autln and Martin Marietta Materials, you can compare the effects of market volatilities on Compaa Minera and Martin Marietta 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 Compaa Minera with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compaa Minera and Martin Marietta.

Diversification Opportunities for Compaa Minera and Martin Marietta

0.24

Correlation Coefficient

Compaa Minera  Martin Marietta

Modest diversification

The 3 months correlation between Compaa and Martin is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Compaa Minera Autln and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials and Compaa Minera 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 Compaa Minera Autln are associated (or correlated) with Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of Compaa Minera i.e., Compaa Minera and Martin Marietta go up and down completely randomly.

Pair Corralation between Compaa Minera and Martin Marietta

Assuming the 90 days trading horizon Compaa Minera Autln is expected to under-perform the Martin Marietta. But the stock apears to be less risky and, when comparing its historical volatility, Compaa Minera Autln is 1.36 times less risky than Martin Marietta. The stock trades about -0.56 of its potential returns per unit of risk. The Martin Marietta Materials is currently generating about -0.33 of returns per unit of risk over similar time horizon. If you would invest  1,179,834  in Martin Marietta Materials on October 12, 2024 and sell it today you would lose (135,281) from holding Martin Marietta Materials or give up 11.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Compaa Minera Autln  vs.  Martin Marietta Materials

Compaa Minera Autln

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compaa Minera Autln has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Martin Marietta Materials

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Martin Marietta is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Compaa Minera and Martin Marietta

The main advantage of trading using opposite Compaa Minera and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compaa Minera position performs unexpectedly, Martin Marietta 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 Martin Marietta will offset losses from the drop in Martin Marietta's long position.

The idea behind Compaa Minera Autln and Martin Marietta Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.