Correlation Between First Majestic and Celanese

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

By analyzing existing cross correlation between First Majestic Silver and Celanese, you can compare the effects of market volatilities on First Majestic and Celanese 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 First Majestic with a short position of Celanese. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Celanese.

Diversification Opportunities for First Majestic and Celanese

0.07

Correlation Coefficient

First Majestic  Celanese

Significant diversification

The 3 months correlation between First and Celanese is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Celanese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celanese and First Majestic 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 First Majestic Silver are associated (or correlated) with Celanese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celanese has no effect on the direction of First Majestic i.e., First Majestic and Celanese go up and down completely randomly.

Pair Corralation between First Majestic and Celanese

Allowing for the 90-day total investment horizon First Majestic Silver is expected to generate 1.0 times more return on investment than Celanese. However, First Majestic is 1.0 times more volatile than Celanese. It trades about 0.08 of its potential returns per unit of risk. Celanese is currently generating about -0.19 per unit of risk. If you would invest  528.00  in First Majestic Silver on September 2, 2024 and sell it today you would earn a total of  83.00  from holding First Majestic Silver or generate 15.72% return on investment over 90 days.

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

First Majestic Silver  vs.  Celanese

First Majestic Silver

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, First Majestic reported solid returns over the last few months and may actually be approaching a breakup point.

Celanese

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celanese 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with First Majestic and Celanese

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

The idea behind First Majestic Silver and Celanese 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.