Correlation Between Cementos Pacasmayo and SGS SA

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

Diversification Opportunities for Cementos Pacasmayo and SGS SA

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Cementos and SGS is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS SA 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 SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and SGS SA go up and down completely randomly.

Pair Corralation between Cementos Pacasmayo and SGS SA

Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to under-perform the SGS SA. In addition to that, Cementos Pacasmayo is 2.73 times more volatile than SGS SA. It trades about -0.1 of its total potential returns per unit of risk. SGS SA is currently generating about -0.02 per unit of volatility. If you would invest  1,001  in SGS SA on October 6, 2024 and sell it today you would lose (3.00) from holding SGS SA or give up 0.3% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Cementos Pacasmayo SAA  vs.  SGS SA

 Performance 
       Timeline  
Cementos Pacasmayo SAA 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
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.
SGS SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SGS SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Cementos Pacasmayo and SGS SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cementos Pacasmayo and SGS SA

The main advantage of trading using opposite Cementos Pacasmayo and SGS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cementos Pacasmayo position performs unexpectedly, SGS SA 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 SGS SA will offset losses from the drop in SGS SA's long position.
The idea behind Cementos Pacasmayo SAA and SGS SA 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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