Correlation Between Newpark Resources and Cementos Pacasmayo
Can any of the company-specific risk be diversified away by investing in both Newpark Resources 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 Newpark Resources and Cementos Pacasmayo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Cementos Pacasmayo SAA, you can compare the effects of market volatilities on Newpark Resources 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 Newpark Resources with a short position of Cementos Pacasmayo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Cementos Pacasmayo.
Diversification Opportunities for Newpark Resources and Cementos Pacasmayo
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Newpark and Cementos is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources 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 Newpark Resources 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 Newpark Resources 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 Newpark Resources i.e., Newpark Resources and Cementos Pacasmayo go up and down completely randomly.
Pair Corralation between Newpark Resources and Cementos Pacasmayo
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 1.01 times more return on investment than Cementos Pacasmayo. However, Newpark Resources is 1.01 times more volatile than Cementos Pacasmayo SAA. It trades about 0.26 of its potential returns per unit of risk. Cementos Pacasmayo SAA is currently generating about -0.06 per unit of risk. If you would invest 681.00 in Newpark Resources on August 28, 2024 and sell it today you would earn a total of 125.00 from holding Newpark Resources or generate 18.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newpark Resources vs. Cementos Pacasmayo SAA
Performance |
| Timeline |
| Newpark Resources |
| Cementos Pacasmayo SAA |
Newpark Resources and Cementos Pacasmayo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Cementos Pacasmayo
The main advantage of trading using opposite Newpark Resources and Cementos Pacasmayo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources 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.| Newpark Resources vs. ProPetro Holding Corp | Newpark Resources vs. RPC Inc | Newpark Resources vs. MRC Global | Newpark Resources vs. Expro Group Holdings |
| Cementos Pacasmayo vs. Holcim | Cementos Pacasmayo vs. Lafargeholcim Ltd ADR | Cementos Pacasmayo 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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