Correlation Between Martin Marietta and Ternium SA

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

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

Diversification Opportunities for Martin Marietta and Ternium SA

0.03

Correlation Coefficient

Martin Marietta  Ternium SA

Significant diversification

The 3 months correlation between Martin and Ternium is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Ternium SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ternium SA and Martin Marietta 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 Martin Marietta Materials are associated (or correlated) with Ternium SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ternium SA has no effect on the direction of Martin Marietta i.e., Martin Marietta and Ternium SA go up and down completely randomly.

Pair Corralation between Martin Marietta and Ternium SA

Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.91 times more return on investment than Ternium SA. However, Martin Marietta Materials is 1.1 times less risky than Ternium SA. It trades about 0.09 of its potential returns per unit of risk. Ternium SA is currently generating about 0.0 per unit of risk. If you would invest  695,642  in Martin Marietta Materials on October 3, 2024 and sell it today you would earn a total of  419,215  from holding Martin Marietta Materials or generate 60.26% return on investment over 90 days.

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

Martin Marietta Materials  vs.  Ternium SA

Martin Marietta Materials

Risk-Adjusted Performance

4 of 100

Insignificant

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

Ternium SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ternium SA 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 primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Martin Marietta and Ternium SA

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

The idea behind Martin Marietta Materials and Ternium SA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.