Correlation Between Cementos Pacasmayo and Freeport

Can any of the company-specific risk be diversified away by investing in both Cementos Pacasmayo and Freeport 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 Freeport 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 Freeport McMoRan 54 percent, you can compare the effects of market volatilities on Cementos Pacasmayo and Freeport 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 Freeport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cementos Pacasmayo and Freeport.

Diversification Opportunities for Cementos Pacasmayo and Freeport

-0.52

Correlation Coefficient

Cementos Pacasmayo  Freeport

Excellent diversification

The 3 months correlation between Cementos and Freeport is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and Freeport McMoRan 54 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 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 Freeport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and Freeport go up and down completely randomly.

Pair Corralation between Cementos Pacasmayo and Freeport

Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to generate 1.59 times more return on investment than Freeport. However, Cementos Pacasmayo is 1.59 times more volatile than Freeport McMoRan 54 percent. It trades about -0.13 of its potential returns per unit of risk. Freeport McMoRan 54 percent is currently generating about -0.35 per unit of risk. If you would invest  564.00  in Cementos Pacasmayo SAA on September 26, 2024 and sell it today you would lose (26.00) from holding Cementos Pacasmayo SAA or give up 4.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Cementos Pacasmayo SAA  vs.  Freeport McMoRan 54 percent

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.

Freeport McMoRan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan 54 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Freeport McMoRan 54 percent investors.

Pair Trading with Cementos Pacasmayo and Freeport

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

The idea behind Cementos Pacasmayo SAA and Freeport McMoRan 54 percent 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.