Correlation Between Grupo Cementos and TopBuild Corp

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

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

Diversification Opportunities for Grupo Cementos and TopBuild Corp

-0.6

Correlation Coefficient

Grupo Cementos  TopBuild Corp

Excellent diversification

The 3 months correlation between Grupo and TopBuild is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Cementos de and TopBuild Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TopBuild Corp and Grupo Cementos 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 Grupo Cementos de are associated (or correlated) with TopBuild Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TopBuild Corp has no effect on the direction of Grupo Cementos i.e., Grupo Cementos and TopBuild Corp go up and down completely randomly.

Pair Corralation between Grupo Cementos and TopBuild Corp

Assuming the 90 days trading horizon Grupo Cementos de is expected to generate 0.83 times more return on investment than TopBuild Corp. However, Grupo Cementos de is 1.21 times less risky than TopBuild Corp. It trades about 0.06 of its potential returns per unit of risk. TopBuild Corp is currently generating about -0.17 per unit of risk. If you would invest  18,025  in Grupo Cementos de on December 30, 2024 and sell it today you would earn a total of  1,105  from holding Grupo Cementos de or generate 6.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Grupo Cementos de  vs.  TopBuild Corp

Grupo Cementos de

Risk-Adjusted Performance

Insignificant

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

TopBuild Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days TopBuild Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Grupo Cementos and TopBuild Corp

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

The idea behind Grupo Cementos de and TopBuild Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.