Correlation Between Cementos Pacasmayo and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Cementos Pacasmayo and Harmony Gold 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 Harmony Gold 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 Harmony Gold Mining, you can compare the effects of market volatilities on Cementos Pacasmayo and Harmony Gold 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cementos Pacasmayo and Harmony Gold.
Diversification Opportunities for Cementos Pacasmayo and Harmony Gold
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cementos and Harmony is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and Harmony Gold go up and down completely randomly.
Pair Corralation between Cementos Pacasmayo and Harmony Gold
Given the investment horizon of 90 days Cementos Pacasmayo is expected to generate 5.06 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Cementos Pacasmayo SAA is 2.01 times less risky than Harmony Gold. It trades about 0.03 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 336.00 in Harmony Gold Mining on August 26, 2024 and sell it today you would earn a total of 627.00 from holding Harmony Gold Mining or generate 186.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cementos Pacasmayo SAA vs. Harmony Gold Mining
Performance |
| Timeline |
| Cementos Pacasmayo SAA |
| Harmony Gold Mining |
Cementos Pacasmayo and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cementos Pacasmayo and Harmony Gold
The main advantage of trading using opposite Cementos Pacasmayo and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cementos Pacasmayo position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| Cementos Pacasmayo vs. Holcim | Cementos Pacasmayo vs. Lafargeholcim Ltd ADR | Cementos Pacasmayo vs. Eagle Materials | Cementos Pacasmayo vs. James Hardie Industries |
| Harmony Gold vs. AngloGold Ashanti plc | Harmony Gold vs. Eldorado Gold Corp | Harmony Gold vs. Kinross Gold | Harmony Gold vs. Pan American Silver |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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