Correlation Between United States and Cemex SAB

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

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

Diversification Opportunities for United States and Cemex SAB

-0.48

Correlation Coefficient

United States  Cemex SAB

Very good diversification

The 3 months correlation between United and Cemex is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel 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 United States 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 United States Steel 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 United States i.e., United States and Cemex SAB go up and down completely randomly.

Pair Corralation between United States and Cemex SAB

Taking into account the 90-day investment horizon United States Steel is expected to under-perform the Cemex SAB. In addition to that, United States is 1.06 times more volatile than Cemex SAB de. It trades about -0.31 of its total potential returns per unit of risk. Cemex SAB de is currently generating about -0.27 per unit of volatility. If you would invest  907.00  in Cemex SAB de on January 29, 2024 and sell it today you would lose (80.00) from holding Cemex SAB de or give up 8.82% of portfolio value over 90 days.

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

United States Steel  vs.  Cemex SAB de

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel 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 basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Cemex SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cemex SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with United States and Cemex SAB

The main advantage of trading using opposite United States and Cemex SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Steel 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.