Correlation Between Grupo Lamosa and Martin Marietta

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

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

Diversification Opportunities for Grupo Lamosa and Martin Marietta

-0.5

Correlation Coefficient

Grupo Lamosa  Martin Marietta

Very good diversification

The 3 months correlation between Grupo and Martin is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Lamosa SAB and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials and Grupo Lamosa 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 Lamosa SAB are associated (or correlated) with Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of Grupo Lamosa i.e., Grupo Lamosa and Martin Marietta go up and down completely randomly.

Pair Corralation between Grupo Lamosa and Martin Marietta

Assuming the 90 days trading horizon Grupo Lamosa SAB is expected to under-perform the Martin Marietta. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Lamosa SAB is 3.57 times less risky than Martin Marietta. The stock trades about -0.1 of its potential returns per unit of risk. The Martin Marietta Materials is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,043,241  in Martin Marietta Materials on September 3, 2024 and sell it today you would earn a total of  172,819  from holding Martin Marietta Materials or generate 16.57% return on investment over 90 days.

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

Grupo Lamosa SAB  vs.  Martin Marietta Materials

Grupo Lamosa SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Lamosa SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Grupo Lamosa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Martin Marietta Materials

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Martin Marietta showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Lamosa and Martin Marietta

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

The idea behind Grupo Lamosa SAB and Martin Marietta Materials 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.