Correlation Between CapitaLand Investment and Cementos Pacasmayo

Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment 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 CapitaLand Investment and Cementos Pacasmayo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CapitaLand Investment Limited and Cementos Pacasmayo SAA, you can compare the effects of market volatilities on CapitaLand Investment 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 CapitaLand Investment with a short position of Cementos Pacasmayo. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and Cementos Pacasmayo.

Diversification Opportunities for CapitaLand Investment and Cementos Pacasmayo

-0.58

Correlation Coefficient

CapitaLand Investment  Cementos Pacasmayo

Excellent diversification

The 3 months correlation between CapitaLand and Cementos is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited 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 CapitaLand Investment 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 CapitaLand Investment Limited 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 CapitaLand Investment i.e., CapitaLand Investment and Cementos Pacasmayo go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Cementos Pacasmayo

Assuming the 90 days horizon CapitaLand Investment is expected to generate 14.6 times less return on investment than Cementos Pacasmayo. But when comparing it to its historical volatility, CapitaLand Investment Limited is 1.09 times less risky than Cementos Pacasmayo. It trades about 0.0 of its potential returns per unit of risk. Cementos Pacasmayo SAA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  536.00  in Cementos Pacasmayo SAA on October 23, 2024 and sell it today you would earn a total of  34.00  from holding Cementos Pacasmayo SAA or generate 6.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CapitaLand Investment Limited  vs.  Cementos Pacasmayo SAA

CapitaLand Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CapitaLand Investment Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, CapitaLand Investment is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Cementos Pacasmayo SAA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cementos Pacasmayo SAA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Cementos Pacasmayo may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CapitaLand Investment and Cementos Pacasmayo

The main advantage of trading using opposite CapitaLand Investment and Cementos Pacasmayo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment 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 CapitaLand Investment Limited 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.