Correlation Between Cemex SAB and Contango ORE

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

Diversification Opportunities for Cemex SAB and Contango ORE

-0.42

Correlation Coefficient

Cemex SAB  Contango ORE

Very good diversification

The 3 months correlation between Cemex and Contango is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cemex SAB de and Contango ORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contango ORE 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 Contango ORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contango ORE has no effect on the direction of Cemex SAB i.e., Cemex SAB and Contango ORE go up and down completely randomly.

Pair Corralation between Cemex SAB and Contango ORE

Allowing for the 90-day total investment horizon Cemex SAB de is expected to generate 0.5 times more return on investment than Contango ORE. However, Cemex SAB de is 1.98 times less risky than Contango ORE. It trades about -0.25 of its potential returns per unit of risk. Contango ORE is currently generating about -0.14 per unit of risk. If you would invest  664.00  in Cemex SAB de on December 11, 2024 and sell it today you would lose (74.00) from holding Cemex SAB de or give up 11.14% of portfolio value over 90 days.

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

Cemex SAB de  vs.  Contango ORE

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 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Cemex SAB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Contango ORE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Contango ORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Cemex SAB and Contango ORE

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

The idea behind Cemex SAB de and Contango ORE 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.