Correlation Between Cemex SAB and Collective Mining

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

Diversification Opportunities for Cemex SAB and Collective Mining

0.4

Correlation Coefficient

Cemex SAB  Collective Mining

Very weak diversification

The 3 months correlation between Cemex and Collective is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cemex SAB de and Collective Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collective Mining 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 Collective Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collective Mining has no effect on the direction of Cemex SAB i.e., Cemex SAB and Collective Mining go up and down completely randomly.

Pair Corralation between Cemex SAB and Collective Mining

Allowing for the 90-day total investment horizon Cemex SAB is expected to generate 18.18 times less return on investment than Collective Mining. But when comparing it to its historical volatility, Cemex SAB de is 1.41 times less risky than Collective Mining. It trades about 0.02 of its potential returns per unit of risk. Collective Mining is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  410.00  in Collective Mining on December 28, 2024 and sell it today you would earn a total of  442.00  from holding Collective Mining or generate 107.8% return on investment over 90 days.

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

Cemex SAB de  vs.  Collective Mining

Cemex SAB de

Risk-Adjusted Performance

Insignificant

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

Collective Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Collective Mining are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Collective Mining disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cemex SAB and Collective Mining

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

The idea behind Cemex SAB de and Collective Mining 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.