Correlation Between Cementos Pacasmayo and Torex Gold

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

Diversification Opportunities for Cementos Pacasmayo and Torex Gold

0.09

Correlation Coefficient

Cementos Pacasmayo  Torex Gold

Significant diversification

The 3 months correlation between Cementos and Torex is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and Torex Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torex Gold Resources 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 Torex Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torex Gold Resources has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and Torex Gold go up and down completely randomly.

Pair Corralation between Cementos Pacasmayo and Torex Gold

Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to under-perform the Torex Gold. But the stock apears to be less risky and, when comparing its historical volatility, Cementos Pacasmayo SAA is 1.04 times less risky than Torex Gold. The stock trades about -0.13 of its potential returns per unit of risk. The Torex Gold Resources is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  2,095  in Torex Gold Resources on October 9, 2024 and sell it today you would lose (123.00) from holding Torex Gold Resources or give up 5.87% of portfolio value over 90 days.

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

Cementos Pacasmayo SAA  vs.  Torex Gold Resources

Cementos Pacasmayo SAA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cementos Pacasmayo SAA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Cementos Pacasmayo is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Torex Gold Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Torex Gold Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Torex Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cementos Pacasmayo and Torex Gold

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

The idea behind Cementos Pacasmayo SAA and Torex Gold Resources 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.