Correlation Between EMCOR and Cementos Pacasmayo

Can any of the company-specific risk be diversified away by investing in both EMCOR and Cementos Pacasmayo 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 EMCOR and Cementos Pacasmayo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EMCOR Group and Cementos Pacasmayo SAA, you can compare the effects of market volatilities on EMCOR and Cementos Pacasmayo 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 EMCOR with a short position of Cementos Pacasmayo. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Cementos Pacasmayo.

Diversification Opportunities for EMCOR and Cementos Pacasmayo

0.56

Correlation Coefficient

EMCOR  Cementos Pacasmayo

Very weak diversification

The 3 months correlation between EMCOR and Cementos is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Cementos Pacasmayo SAA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cementos Pacasmayo SAA and EMCOR 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 EMCOR Group are associated (or correlated) with Cementos Pacasmayo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cementos Pacasmayo SAA has no effect on the direction of EMCOR i.e., EMCOR and Cementos Pacasmayo go up and down completely randomly.

Pair Corralation between EMCOR and Cementos Pacasmayo

Considering the 90-day investment horizon EMCOR Group is expected to generate 0.78 times more return on investment than Cementos Pacasmayo. However, EMCOR Group is 1.29 times less risky than Cementos Pacasmayo. It trades about 0.26 of its potential returns per unit of risk. Cementos Pacasmayo SAA is currently generating about 0.01 per unit of risk. If you would invest  46,407  in EMCOR Group on October 20, 2024 and sell it today you would earn a total of  4,240  from holding EMCOR Group or generate 9.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

EMCOR Group  vs.  Cementos Pacasmayo SAA

EMCOR Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, EMCOR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 unfluctuating basic indicators, Cementos Pacasmayo may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with EMCOR and Cementos Pacasmayo

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

The idea behind EMCOR Group and Cementos Pacasmayo SAA 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.

Check out your portfolio center.

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 Stocks Directory module to find actively traded stocks across global markets.