Correlation Between CEMATRIX and Martin Marietta

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

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

Diversification Opportunities for CEMATRIX and Martin Marietta

-0.54

Correlation Coefficient

CEMATRIX  Martin Marietta

Excellent diversification

The 3 months correlation between CEMATRIX and Martin is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CEMATRIX and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials and CEMATRIX 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 CEMATRIX are associated (or correlated) with Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of CEMATRIX i.e., CEMATRIX and Martin Marietta go up and down completely randomly.

Pair Corralation between CEMATRIX and Martin Marietta

Assuming the 90 days horizon CEMATRIX is expected to generate 3.55 times more return on investment than Martin Marietta. However, CEMATRIX is 3.55 times more volatile than Martin Marietta Materials. It trades about 0.03 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.04 per unit of risk. If you would invest  20.00  in CEMATRIX on September 1, 2024 and sell it today you would earn a total of  0.00  from holding CEMATRIX or generate 0.0% return on investment over 90 days.

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

CEMATRIX  vs.  Martin Marietta Materials

CEMATRIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEMATRIX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CEMATRIX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Martin Marietta Materials

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent essential indicators, Martin Marietta displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CEMATRIX and Martin Marietta

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

The idea behind CEMATRIX and Martin Marietta Materials 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 Global Correlations module to find global opportunities by holding instruments from different markets.