Correlation Between Cementos Pacasmayo and GMS
Can any of the company-specific risk be diversified away by investing in both Cementos Pacasmayo and GMS 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 GMS 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 GMS Inc, you can compare the effects of market volatilities on Cementos Pacasmayo and GMS 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 GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cementos Pacasmayo and GMS.
Diversification Opportunities for Cementos Pacasmayo and GMS
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cementos and GMS is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc 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 GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and GMS go up and down completely randomly.
Pair Corralation between Cementos Pacasmayo and GMS
Given the investment horizon of 90 days Cementos Pacasmayo is expected to generate 3.48 times less return on investment than GMS. But when comparing it to its historical volatility, Cementos Pacasmayo SAA is 1.17 times less risky than GMS. It trades about 0.03 of its potential returns per unit of risk. GMS Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,938 in GMS Inc on August 28, 2024 and sell it today you would earn a total of 5,446 from holding GMS Inc or generate 110.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cementos Pacasmayo SAA vs. GMS Inc
Performance |
| Timeline |
| Cementos Pacasmayo SAA |
| GMS Inc |
Cementos Pacasmayo and GMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cementos Pacasmayo and GMS
The main advantage of trading using opposite Cementos Pacasmayo and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cementos Pacasmayo position performs unexpectedly, GMS 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 GMS will offset losses from the drop in GMS's long position.| Cementos Pacasmayo vs. Summit Materials | Cementos Pacasmayo vs. Eagle Materials | Cementos Pacasmayo vs. United States Lime | Cementos Pacasmayo vs. James Hardie Industries |
| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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