Correlation Between Cementos Pacasmayo and James Hardie
Can any of the company-specific risk be diversified away by investing in both Cementos Pacasmayo and James Hardie 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 James Hardie 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 James Hardie Industries, you can compare the effects of market volatilities on Cementos Pacasmayo and James Hardie 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 James Hardie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cementos Pacasmayo and James Hardie.
Diversification Opportunities for Cementos Pacasmayo and James Hardie
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cementos and James is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and James Hardie Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Hardie Industries 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 James Hardie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Hardie Industries has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and James Hardie go up and down completely randomly.
Pair Corralation between Cementos Pacasmayo and James Hardie
Given the investment horizon of 90 days Cementos Pacasmayo is expected to generate 3.02 times less return on investment than James Hardie. But when comparing it to its historical volatility, Cementos Pacasmayo SAA is 1.47 times less risky than James Hardie. It trades about 0.03 of its potential returns per unit of risk. James Hardie Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,922 in James Hardie Industries on August 27, 2024 and sell it today you would earn a total of 1,644 from holding James Hardie Industries or generate 85.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cementos Pacasmayo SAA vs. James Hardie Industries
Performance |
| Timeline |
| Cementos Pacasmayo SAA |
| James Hardie Industries |
Cementos Pacasmayo and James Hardie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cementos Pacasmayo and James Hardie
The main advantage of trading using opposite Cementos Pacasmayo and James Hardie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cementos Pacasmayo position performs unexpectedly, James Hardie 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 James Hardie will offset losses from the drop in James Hardie'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 |
| James Hardie vs. Holcim | James Hardie vs. Lafargeholcim Ltd ADR | James Hardie vs. Eagle Materials | James Hardie vs. The Monarch Cement |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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