Correlation Between CEMEX SAB and Controladora Vuela

Can any of the company-specific risk be diversified away by investing in both CEMEX SAB and Controladora Vuela 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 Controladora Vuela 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 Controladora Vuela Compaa, you can compare the effects of market volatilities on CEMEX SAB and Controladora Vuela 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 Controladora Vuela. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEMEX SAB and Controladora Vuela.

Diversification Opportunities for CEMEX SAB and Controladora Vuela

-0.53

Correlation Coefficient

CEMEX SAB  Controladora Vuela

Excellent diversification

The 3 months correlation between CEMEX and Controladora is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CEMEX SAB de and Controladora Vuela Compaa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Controladora Vuela Compaa 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 Controladora Vuela. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Controladora Vuela Compaa has no effect on the direction of CEMEX SAB i.e., CEMEX SAB and Controladora Vuela go up and down completely randomly.

Pair Corralation between CEMEX SAB and Controladora Vuela

Assuming the 90 days trading horizon CEMEX SAB is expected to generate 18.32 times less return on investment than Controladora Vuela. In addition to that, CEMEX SAB is 1.07 times more volatile than Controladora Vuela Compaa. It trades about 0.01 of its total potential returns per unit of risk. Controladora Vuela Compaa is currently generating about 0.12 per unit of volatility. If you would invest  1,205  in Controladora Vuela Compaa on September 23, 2024 and sell it today you would earn a total of  388.00  from holding Controladora Vuela Compaa or generate 32.2% return on investment over 90 days.

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

CEMEX SAB de  vs.  Controladora Vuela Compaa

CEMEX SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEMEX SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Controladora Vuela Compaa

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Controladora Vuela Compaa are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Controladora Vuela sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CEMEX SAB and Controladora Vuela

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

The idea behind CEMEX SAB de and Controladora Vuela Compaa 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.