Correlation Between Cementos Pacasmayo and Lafargeholcim
Can any of the company-specific risk be diversified away by investing in both Cementos Pacasmayo and Lafargeholcim 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 Lafargeholcim 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 Lafargeholcim Ltd ADR, you can compare the effects of market volatilities on Cementos Pacasmayo and Lafargeholcim 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 Lafargeholcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cementos Pacasmayo and Lafargeholcim.
Diversification Opportunities for Cementos Pacasmayo and Lafargeholcim
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cementos and Lafargeholcim is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and Lafargeholcim Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lafargeholcim ADR 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 Lafargeholcim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lafargeholcim ADR has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and Lafargeholcim go up and down completely randomly.
Pair Corralation between Cementos Pacasmayo and Lafargeholcim
Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to under-perform the Lafargeholcim. In addition to that, Cementos Pacasmayo is 2.55 times more volatile than Lafargeholcim Ltd ADR. It trades about -0.14 of its total potential returns per unit of risk. Lafargeholcim Ltd ADR is currently generating about 0.06 per unit of volatility. If you would invest 1,978 in Lafargeholcim Ltd ADR on August 31, 2024 and sell it today you would earn a total of 27.00 from holding Lafargeholcim Ltd ADR or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cementos Pacasmayo SAA vs. Lafargeholcim Ltd ADR
Performance |
| Timeline |
| Cementos Pacasmayo SAA |
| Lafargeholcim ADR |
Cementos Pacasmayo and Lafargeholcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cementos Pacasmayo and Lafargeholcim
The main advantage of trading using opposite Cementos Pacasmayo and Lafargeholcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cementos Pacasmayo position performs unexpectedly, Lafargeholcim 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 Lafargeholcim will offset losses from the drop in Lafargeholcim'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 |
| Lafargeholcim vs. Anhui Conch Cement | Lafargeholcim vs. Buzzi Unicem SpA | Lafargeholcim vs. Wienerberger Baustoffindustrie | Lafargeholcim vs. China National Building |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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