Correlation Between Promotora and CEMEX SAB

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

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

Diversification Opportunities for Promotora and CEMEX SAB

-0.09

Correlation Coefficient

Promotora  CEMEX SAB

Good diversification

The 3 months correlation between Promotora and CEMEX is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora 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 Promotora 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 Promotora y Operadora 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 Promotora i.e., Promotora and CEMEX SAB go up and down completely randomly.

Pair Corralation between Promotora and CEMEX SAB

Assuming the 90 days trading horizon Promotora is expected to generate 1.38 times less return on investment than CEMEX SAB. But when comparing it to its historical volatility, Promotora y Operadora is 1.47 times less risky than CEMEX SAB. It trades about 0.03 of its potential returns per unit of risk. CEMEX SAB de is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,139  in CEMEX SAB de on October 5, 2024 and sell it today you would earn a total of  26.00  from holding CEMEX SAB de or generate 2.28% return on investment over 90 days.

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

Promotora y Operadora  vs.  CEMEX SAB de

Promotora y Operadora

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Promotora y Operadora are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Promotora is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CEMEX SAB de

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CEMEX SAB de are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, CEMEX SAB is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Promotora and CEMEX SAB

The main advantage of trading using opposite Promotora and CEMEX SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promotora 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 Promotora y Operadora 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.