Correlation Between Eldorado Gold and Cementos Pacasmayo
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Cementos Pacasmayo 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 Eldorado Gold and Cementos Pacasmayo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eldorado Gold Corp and Cementos Pacasmayo SAA, you can compare the effects of market volatilities on Eldorado Gold and Cementos Pacasmayo 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 Eldorado Gold with a short position of Cementos Pacasmayo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Cementos Pacasmayo.
Diversification Opportunities for Eldorado Gold and Cementos Pacasmayo
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eldorado and Cementos is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Cementos Pacasmayo SAA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cementos Pacasmayo SAA and Eldorado Gold 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 Eldorado Gold Corp are associated (or correlated) with Cementos Pacasmayo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cementos Pacasmayo SAA has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Cementos Pacasmayo go up and down completely randomly.
Pair Corralation between Eldorado Gold and Cementos Pacasmayo
Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 1.5 times more return on investment than Cementos Pacasmayo. However, Eldorado Gold is 1.5 times more volatile than Cementos Pacasmayo SAA. It trades about 0.07 of its potential returns per unit of risk. Cementos Pacasmayo SAA is currently generating about 0.03 per unit of risk. If you would invest 1,076 in Eldorado Gold Corp on January 19, 2024 and sell it today you would earn a total of 422.00 from holding Eldorado Gold Corp or generate 39.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 99.6% |
Values | Daily Returns |
Eldorado Gold Corp vs. Cementos Pacasmayo SAA
Performance |
Timeline |
Eldorado Gold Corp |
Cementos Pacasmayo SAA |
Eldorado Gold and Cementos Pacasmayo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eldorado Gold and Cementos Pacasmayo
The main advantage of trading using opposite Eldorado Gold and Cementos Pacasmayo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Cementos Pacasmayo 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 Cementos Pacasmayo will offset losses from the drop in Cementos Pacasmayo's long position.Eldorado Gold vs. Paramount Gold Nevada | Eldorado Gold vs. Liberty Gold Corp | Eldorado Gold vs. International Tower Hill | Eldorado Gold vs. Allegiant Gold |
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Check out your portfolio center.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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