Correlation Between Uber Technologies and Cementos Pacasmayo

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

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

Diversification Opportunities for Uber Technologies and Cementos Pacasmayo

0.64

Correlation Coefficient

Uber Technologies  Cementos Pacasmayo

Poor diversification

The 3 months correlation between Uber and Cementos is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies 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 Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Cementos Pacasmayo go up and down completely randomly.

Pair Corralation between Uber Technologies and Cementos Pacasmayo

Given the investment horizon of 90 days Uber Technologies is expected to generate 0.85 times more return on investment than Cementos Pacasmayo. However, Uber Technologies is 1.18 times less risky than Cementos Pacasmayo. It trades about -0.31 of its potential returns per unit of risk. Cementos Pacasmayo SAA is currently generating about -0.28 per unit of risk. If you would invest  7,811  in Uber Technologies on January 27, 2024 and sell it today you would lose (880.00) from holding Uber Technologies or give up 11.27% of portfolio value over 90 days.

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

Uber Technologies  vs.  Cementos Pacasmayo SAA

Uber Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Uber Technologies is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Uber Technologies and Cementos Pacasmayo

The main advantage of trading using opposite Uber Technologies and Cementos Pacasmayo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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.

The idea behind Uber Technologies and Cementos Pacasmayo SAA 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.