Correlation Between Holcim and CEMEX SAB

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

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

Diversification Opportunities for Holcim and CEMEX SAB

0.48

Correlation Coefficient

Holcim  CEMEX SAB

Very weak diversification

The 3 months correlation between Holcim and CEMEX is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Holcim and CEMEX SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEMEX SAB de and Holcim 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 Holcim are associated (or correlated) with CEMEX SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEMEX SAB de has no effect on the direction of Holcim i.e., Holcim and CEMEX SAB go up and down completely randomly.

Pair Corralation between Holcim and CEMEX SAB

Assuming the 90 days horizon Holcim is expected to generate 0.67 times more return on investment than CEMEX SAB. However, Holcim is 1.49 times less risky than CEMEX SAB. It trades about 0.14 of its potential returns per unit of risk. CEMEX SAB de is currently generating about 0.04 per unit of risk. If you would invest  9,785  in Holcim on December 26, 2024 and sell it today you would earn a total of  1,715  from holding Holcim or generate 17.53% return on investment over 90 days.

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

Holcim  vs.  CEMEX SAB de

Holcim

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Holcim are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Holcim reported solid returns over the last few months and may actually be approaching a breakup point.

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 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CEMEX SAB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Holcim and CEMEX SAB

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

The idea behind Holcim and CEMEX SAB de 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.