Correlation Between Cementos Pacasmayo and Grupo Cementos

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

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

Diversification Opportunities for Cementos Pacasmayo and Grupo Cementos

-0.38

Correlation Coefficient

Cementos Pacasmayo  Grupo Cementos

Very good diversification

The 3 months correlation between Cementos and Grupo is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and Grupo Cementos de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Cementos de and Cementos Pacasmayo 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 Cementos Pacasmayo SAA are associated (or correlated) with Grupo Cementos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Cementos de has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and Grupo Cementos go up and down completely randomly.

Pair Corralation between Cementos Pacasmayo and Grupo Cementos

Given the investment horizon of 90 days Cementos Pacasmayo is expected to generate 3.15 times less return on investment than Grupo Cementos. But when comparing it to its historical volatility, Cementos Pacasmayo SAA is 1.47 times less risky than Grupo Cementos. It trades about 0.02 of its potential returns per unit of risk. Grupo Cementos de is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  699.00  in Grupo Cementos de on January 25, 2024 and sell it today you would earn a total of  501.00  from holding Grupo Cementos de or generate 71.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.39%
Values	Daily Returns

Cementos Pacasmayo SAA  vs.  Grupo Cementos de

Cementos Pacasmayo SAA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cementos Pacasmayo SAA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Cementos Pacasmayo is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Grupo Cementos de

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Cementos de are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Grupo Cementos may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Cementos Pacasmayo and Grupo Cementos

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

The idea behind Cementos Pacasmayo SAA and Grupo Cementos 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.