Correlation Between Cementos Pacasmayo and EMCOR

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

Diversification Opportunities for Cementos Pacasmayo and EMCOR

0.79

Correlation Coefficient

Cementos Pacasmayo  EMCOR

Poor diversification

The 3 months correlation between Cementos and EMCOR is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group 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 EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and EMCOR go up and down completely randomly.

Pair Corralation between Cementos Pacasmayo and EMCOR

Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to generate 0.79 times more return on investment than EMCOR. However, Cementos Pacasmayo SAA is 1.26 times less risky than EMCOR. It trades about 0.09 of its potential returns per unit of risk. EMCOR Group is currently generating about -0.07 per unit of risk. If you would invest  582.00  in Cementos Pacasmayo SAA on September 18, 2024 and sell it today you would earn a total of  16.00  from holding Cementos Pacasmayo SAA or generate 2.75% return on investment over 90 days.

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

Cementos Pacasmayo SAA  vs.  EMCOR Group

Cementos Pacasmayo SAA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cementos Pacasmayo SAA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Cementos Pacasmayo exhibited solid returns over the last few months and may actually be approaching a breakup point.

EMCOR Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, EMCOR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cementos Pacasmayo and EMCOR

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

The idea behind Cementos Pacasmayo SAA and EMCOR Group 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.