Correlation Between Cementos Pacasmayo and Stepan
Can any of the company-specific risk be diversified away by investing in both Cementos Pacasmayo and Stepan 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 Stepan 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 Stepan Company, you can compare the effects of market volatilities on Cementos Pacasmayo and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cementos Pacasmayo and Stepan.
Diversification Opportunities for Cementos Pacasmayo and Stepan
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cementos and Stepan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and Stepan go up and down completely randomly.
Pair Corralation between Cementos Pacasmayo and Stepan
Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to generate 0.91 times more return on investment than Stepan. However, Cementos Pacasmayo SAA is 1.1 times less risky than Stepan. It trades about 0.03 of its potential returns per unit of risk. Stepan Company is currently generating about -0.03 per unit of risk. If you would invest 482.00 in Cementos Pacasmayo SAA on September 1, 2024 and sell it today you would earn a total of 93.00 from holding Cementos Pacasmayo SAA or generate 19.29% 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. Stepan Company
Performance |
| Timeline |
| Cementos Pacasmayo SAA |
| Stepan Company |
Cementos Pacasmayo and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cementos Pacasmayo and Stepan
The main advantage of trading using opposite Cementos Pacasmayo and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cementos Pacasmayo position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan'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 |
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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