Correlation Between Cementos Pacasmayo and Universal Stainless

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

Diversification Opportunities for Cementos Pacasmayo and Universal Stainless

0.4

Correlation Coefficient

Cementos Pacasmayo  Universal Stainless

Very weak diversification

The 3 months correlation between Cementos and Universal is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and Universal Stainless Alloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Stainless Alloy 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 Universal Stainless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Stainless Alloy has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and Universal Stainless go up and down completely randomly.

Pair Corralation between Cementos Pacasmayo and Universal Stainless

Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to generate 5.9 times more return on investment than Universal Stainless. However, Cementos Pacasmayo is 5.9 times more volatile than Universal Stainless Alloy. It trades about 0.13 of its potential returns per unit of risk. Universal Stainless Alloy is currently generating about 0.31 per unit of risk. If you would invest  538.00  in Cementos Pacasmayo SAA on October 26, 2024 and sell it today you would earn a total of  27.00  from holding Cementos Pacasmayo SAA or generate 5.02% return on investment over 90 days.

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

Cementos Pacasmayo SAA  vs.  Universal Stainless Alloy

Cementos Pacasmayo SAA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cementos Pacasmayo SAA are ranked lower than 3 (%) 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.

Universal Stainless Alloy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Stainless Alloy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Universal Stainless is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cementos Pacasmayo and Universal Stainless

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

The idea behind Cementos Pacasmayo SAA and Universal Stainless Alloy 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.