Correlation Between Cementos Pacasmayo and Discover Financial

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

Diversification Opportunities for Cementos Pacasmayo and Discover Financial

0.32

Correlation Coefficient

Cementos Pacasmayo  Discover Financial

Weak diversification

The 3 months correlation between Cementos and Discover is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial 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 Discover Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discover Financial has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and Discover Financial go up and down completely randomly.

Pair Corralation between Cementos Pacasmayo and Discover Financial

Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to generate 0.71 times more return on investment than Discover Financial. However, Cementos Pacasmayo SAA is 1.42 times less risky than Discover Financial. It trades about 0.08 of its potential returns per unit of risk. Discover Financial Services is currently generating about -0.02 per unit of risk. If you would invest  537.00  in Cementos Pacasmayo SAA on December 21, 2024 and sell it today you would earn a total of  40.00  from holding Cementos Pacasmayo SAA or generate 7.45% return on investment over 90 days.

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

Cementos Pacasmayo SAA  vs.  Discover Financial Services

Cementos Pacasmayo SAA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cementos Pacasmayo SAA are ranked lower than 6 (%) 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.

Discover Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Discover Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Discover Financial 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 Discover Financial

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

The idea behind Cementos Pacasmayo SAA and Discover Financial Services 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.