Correlation Between Cementos Pacasmayo and Ares Acquisition

Can any of the company-specific risk be diversified away by investing in both Cementos Pacasmayo and Ares Acquisition 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 Ares Acquisition 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 Ares Acquisition, you can compare the effects of market volatilities on Cementos Pacasmayo and Ares Acquisition 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 Ares Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cementos Pacasmayo and Ares Acquisition.

Diversification Opportunities for Cementos Pacasmayo and Ares Acquisition

0.4

Correlation Coefficient

Cementos Pacasmayo  Ares Acquisition

Very weak diversification

The 3 months correlation between Cementos and Ares is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and Ares Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Acquisition 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 Ares Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Acquisition has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and Ares Acquisition go up and down completely randomly.

Pair Corralation between Cementos Pacasmayo and Ares Acquisition

Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to under-perform the Ares Acquisition. In addition to that, Cementos Pacasmayo is 22.53 times more volatile than Ares Acquisition. It trades about -0.08 of its total potential returns per unit of risk. Ares Acquisition is currently generating about 0.19 per unit of volatility. If you would invest  1,093  in Ares Acquisition on October 8, 2024 and sell it today you would earn a total of  4.00  from holding Ares Acquisition or generate 0.37% return on investment over 90 days.

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

Cementos Pacasmayo SAA  vs.  Ares Acquisition

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.

Ares Acquisition

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ares Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cementos Pacasmayo and Ares Acquisition

The main advantage of trading using opposite Cementos Pacasmayo and Ares Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cementos Pacasmayo position performs unexpectedly, Ares Acquisition 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 Ares Acquisition will offset losses from the drop in Ares Acquisition's long position.

The idea behind Cementos Pacasmayo SAA and Ares Acquisition 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.