Correlation Between Cemex SAB and Tecnoglass

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

Diversification Opportunities for Cemex SAB and Tecnoglass

-0.37

Correlation Coefficient

Cemex SAB  Tecnoglass

Very good diversification

The 3 months correlation between Cemex and Tecnoglass is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cemex SAB de and Tecnoglass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecnoglass 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 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 Cemex SAB i.e., Cemex SAB and Tecnoglass go up and down completely randomly.

Pair Corralation between Cemex SAB and Tecnoglass

Allowing for the 90-day total investment horizon Cemex SAB is expected to generate 4.76 times less return on investment than Tecnoglass. In addition to that, Cemex SAB is 1.1 times more volatile than Tecnoglass. It trades about 0.07 of its total potential returns per unit of risk. Tecnoglass is currently generating about 0.37 per unit of volatility. If you would invest  7,385  in Tecnoglass on September 19, 2024 and sell it today you would earn a total of  1,071  from holding Tecnoglass or generate 14.5% return on investment over 90 days.

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

Cemex SAB de  vs.  Tecnoglass

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. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Tecnoglass

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tecnoglass are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Tecnoglass unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cemex SAB and Tecnoglass

The main advantage of trading using opposite Cemex SAB and Tecnoglass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cemex SAB 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 Cemex SAB de 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..