Correlation Between CEMATRIX and Tecnoglass

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

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

Diversification Opportunities for CEMATRIX and Tecnoglass

-0.3

Correlation Coefficient

CEMATRIX  Tecnoglass

Very good diversification

The 3 months correlation between CEMATRIX and Tecnoglass is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding CEMATRIX and Tecnoglass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecnoglass and CEMATRIX 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 CEMATRIX are associated (or correlated) with Tecnoglass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecnoglass has no effect on the direction of CEMATRIX i.e., CEMATRIX and Tecnoglass go up and down completely randomly.

Pair Corralation between CEMATRIX and Tecnoglass

Assuming the 90 days horizon CEMATRIX is expected to generate 1.93 times more return on investment than Tecnoglass. However, CEMATRIX is 1.93 times more volatile than Tecnoglass. It trades about -0.05 of its potential returns per unit of risk. Tecnoglass is currently generating about -0.19 per unit of risk. If you would invest  19.00  in CEMATRIX on October 8, 2024 and sell it today you would lose (1.00) from holding CEMATRIX or give up 5.26% of portfolio value over 90 days.

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

CEMATRIX  vs.  Tecnoglass

CEMATRIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEMATRIX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CEMATRIX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Tecnoglass

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tecnoglass are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Tecnoglass may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CEMATRIX and Tecnoglass

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

The idea behind CEMATRIX and Tecnoglass 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.