Correlation Between Cementos Pacasmayo and Black Hills

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

Diversification Opportunities for Cementos Pacasmayo and Black Hills

0.38

Correlation Coefficient

Cementos Pacasmayo  Black Hills

Weak diversification

The 3 months correlation between Cementos and Black is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills 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 Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and Black Hills go up and down completely randomly.

Pair Corralation between Cementos Pacasmayo and Black Hills

Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to generate 2.21 times more return on investment than Black Hills. However, Cementos Pacasmayo is 2.21 times more volatile than Black Hills. It trades about -0.08 of its potential returns per unit of risk. Black Hills is currently generating about -0.31 per unit of risk. If you would invest  586.00  in Cementos Pacasmayo SAA on October 8, 2024 and sell it today you would lose (22.00) from holding Cementos Pacasmayo SAA or give up 3.75% of portfolio value over 90 days.

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

Cementos Pacasmayo SAA  vs.  Black Hills

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.

Black Hills

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Hills has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Black Hills is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Cementos Pacasmayo and Black Hills

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

The idea behind Cementos Pacasmayo SAA and Black Hills 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.