Correlation Between Lonking Holdings and Cementos Pacasmayo

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Can any of the company-specific risk be diversified away by investing in both Lonking Holdings and Cementos Pacasmayo 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 Lonking Holdings and Cementos Pacasmayo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lonking Holdings Ltd and Cementos Pacasmayo SAA, you can compare the effects of market volatilities on Lonking Holdings and Cementos Pacasmayo 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 Lonking Holdings with a short position of Cementos Pacasmayo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonking Holdings and Cementos Pacasmayo.

Diversification Opportunities for Lonking Holdings and Cementos Pacasmayo

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Lonking and Cementos is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lonking Holdings Ltd and Cementos Pacasmayo SAA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cementos Pacasmayo SAA and Lonking Holdings 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 Lonking Holdings Ltd are associated (or correlated) with Cementos Pacasmayo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cementos Pacasmayo SAA has no effect on the direction of Lonking Holdings i.e., Lonking Holdings and Cementos Pacasmayo go up and down completely randomly.

Pair Corralation between Lonking Holdings and Cementos Pacasmayo

Assuming the 90 days horizon Lonking Holdings Ltd is expected to under-perform the Cementos Pacasmayo. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lonking Holdings Ltd is 1.19 times less risky than Cementos Pacasmayo. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Cementos Pacasmayo SAA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  570.00  in Cementos Pacasmayo SAA on September 12, 2024 and sell it today you would earn a total of  28.00  from holding Cementos Pacasmayo SAA or generate 4.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.44%
ValuesDaily Returns

Lonking Holdings Ltd  vs.  Cementos Pacasmayo SAA

 Performance 
       Timeline  
Lonking Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lonking Holdings Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Cementos Pacasmayo SAA 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Cementos Pacasmayo SAA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Cementos Pacasmayo is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Lonking Holdings and Cementos Pacasmayo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lonking Holdings and Cementos Pacasmayo

The main advantage of trading using opposite Lonking Holdings and Cementos Pacasmayo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonking Holdings position performs unexpectedly, Cementos Pacasmayo 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 Cementos Pacasmayo will offset losses from the drop in Cementos Pacasmayo's long position.
The idea behind Lonking Holdings Ltd and Cementos Pacasmayo SAA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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