Correlation Between Cementos Pacasmayo and BTU Metals
Can any of the company-specific risk be diversified away by investing in both Cementos Pacasmayo and BTU Metals 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 BTU Metals 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 BTU Metals Corp, you can compare the effects of market volatilities on Cementos Pacasmayo and BTU Metals 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 BTU Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cementos Pacasmayo and BTU Metals.
Diversification Opportunities for Cementos Pacasmayo and BTU Metals
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cementos and BTU is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and BTU Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTU Metals Corp 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 BTU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTU Metals Corp has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and BTU Metals go up and down completely randomly.
Pair Corralation between Cementos Pacasmayo and BTU Metals
Given the investment horizon of 90 days Cementos Pacasmayo is expected to generate 2.05 times less return on investment than BTU Metals. But when comparing it to its historical volatility, Cementos Pacasmayo SAA is 1.41 times less risky than BTU Metals. It trades about 0.03 of its potential returns per unit of risk. BTU Metals Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1.91 in BTU Metals Corp on October 24, 2024 and sell it today you would earn a total of 0.09 from holding BTU Metals Corp or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.16% |
| Values | Daily Returns |
Cementos Pacasmayo SAA vs. BTU Metals Corp
Performance |
| Timeline |
| Cementos Pacasmayo SAA |
| BTU Metals Corp |
Cementos Pacasmayo and BTU Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cementos Pacasmayo and BTU Metals
The main advantage of trading using opposite Cementos Pacasmayo and BTU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cementos Pacasmayo position performs unexpectedly, BTU Metals 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 BTU Metals will offset losses from the drop in BTU Metals' long position.| Cementos Pacasmayo vs. Summit Materials | Cementos Pacasmayo vs. Eagle Materials | Cementos Pacasmayo vs. United States Lime | Cementos Pacasmayo vs. James Hardie Industries |
| BTU Metals vs. Griffon | BTU Metals vs. Cementos Pacasmayo SAA | BTU Metals vs. Parker Hannifin | BTU Metals vs. Ainsworth Game Technology |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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