Correlation Between Cemex SAB and Loma Negra

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

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

Diversification Opportunities for Cemex SAB and Loma Negra

0.21

Correlation Coefficient

Cemex SAB  Loma Negra

Modest diversification

The 3 months correlation between Cemex and Loma is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cemex SAB de and Loma Negra Compania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loma Negra Compania and Cemex SAB 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 Cemex SAB de are associated (or correlated) with Loma Negra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loma Negra Compania has no effect on the direction of Cemex SAB i.e., Cemex SAB and Loma Negra go up and down completely randomly.

Pair Corralation between Cemex SAB and Loma Negra

Allowing for the 90-day total investment horizon Cemex SAB de is expected to under-perform the Loma Negra. But the stock apears to be less risky and, when comparing its historical volatility, Cemex SAB de is 1.5 times less risky than Loma Negra. The stock trades about -0.17 of its potential returns per unit of risk. The Loma Negra Compania is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  697.00  in Loma Negra Compania on February 14, 2024 and sell it today you would earn a total of  25.00  from holding Loma Negra Compania or generate 3.59% return on investment over 90 days.

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

Cemex SAB de  vs.  Loma Negra Compania

Cemex SAB de

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cemex SAB de are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Cemex SAB is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Loma Negra Compania

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Loma Negra Compania are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Loma Negra sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cemex SAB and Loma Negra

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

The idea behind Cemex SAB de and Loma Negra Compania 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.