Correlation Between Cementos Pacasmayo and SIMON

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

Diversification Opportunities for Cementos Pacasmayo and SIMON

-0.33

Correlation Coefficient

Cementos Pacasmayo  SIMON

Very good diversification

The 3 months correlation between Cementos and SIMON is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and SIMON PPTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PPTY 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 SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PPTY GROUP has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and SIMON go up and down completely randomly.

Pair Corralation between Cementos Pacasmayo and SIMON

Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to generate 4.09 times more return on investment than SIMON. However, Cementos Pacasmayo is 4.09 times more volatile than SIMON PPTY GROUP. It trades about -0.16 of its potential returns per unit of risk. SIMON PPTY GROUP is currently generating about -0.68 per unit of risk. If you would invest  586.00  in Cementos Pacasmayo SAA on October 10, 2024 and sell it today you would lose (43.00) from holding Cementos Pacasmayo SAA or give up 7.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.38%
Values	Daily Returns

Cementos Pacasmayo SAA  vs.  SIMON PPTY GROUP

Cementos Pacasmayo SAA

Risk-Adjusted Performance

4 of 100

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 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.

SIMON PPTY GROUP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SIMON PPTY GROUP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, SIMON may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cementos Pacasmayo and SIMON

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

The idea behind Cementos Pacasmayo SAA and SIMON PPTY 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.