Correlation Between Cementos Pacasmayo and BorgWarner

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

Diversification Opportunities for Cementos Pacasmayo and BorgWarner

-0.48

Correlation Coefficient

Cementos Pacasmayo  BorgWarner

Very good diversification

The 3 months correlation between Cementos and BorgWarner is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner 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 BorgWarner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BorgWarner has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and BorgWarner go up and down completely randomly.

Pair Corralation between Cementos Pacasmayo and BorgWarner

Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to generate 0.94 times more return on investment than BorgWarner. However, Cementos Pacasmayo SAA is 1.06 times less risky than BorgWarner. It trades about 0.1 of its potential returns per unit of risk. BorgWarner is currently generating about -0.09 per unit of risk. If you would invest  525.00  in Cementos Pacasmayo SAA on December 30, 2024 and sell it today you would earn a total of  55.00  from holding Cementos Pacasmayo SAA or generate 10.48% return on investment over 90 days.

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

Cementos Pacasmayo SAA  vs.  BorgWarner

Cementos Pacasmayo SAA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cementos Pacasmayo SAA are ranked lower than 8 (%) 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 April 2025.

BorgWarner

Risk-Adjusted Performance

Very Weak

Over the last 90 days BorgWarner has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Cementos Pacasmayo and BorgWarner

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

The idea behind Cementos Pacasmayo SAA and BorgWarner 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.