Correlation Between Knife River and Cemex SAB

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

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

Diversification Opportunities for Knife River and Cemex SAB

-0.5

Correlation Coefficient

Knife River  Cemex SAB

Very good diversification

The 3 months correlation between Knife and Cemex is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Knife River 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 Knife River 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 Knife River 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 Knife River i.e., Knife River and Cemex SAB go up and down completely randomly.

Pair Corralation between Knife River and Cemex SAB

Considering the 90-day investment horizon Knife River is expected to under-perform the Cemex SAB. In addition to that, Knife River is 1.34 times more volatile than Cemex SAB de. It trades about -0.06 of its total potential returns per unit of risk. Cemex SAB de is currently generating about 0.3 per unit of volatility. If you would invest  617.00  in Cemex SAB de on May 6, 2025 and sell it today you would earn a total of  223.00  from holding Cemex SAB de or generate 36.14% return on investment over 90 days.

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

Knife River  vs.  Cemex SAB de

Knife River

Risk-Adjusted Performance

Very Weak

Over the last 90 days Knife River has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Cemex SAB de

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cemex SAB de are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Cemex SAB showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Knife River and Cemex SAB

The main advantage of trading using opposite Knife River and Cemex SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River 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 Knife River 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 Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.