Correlation Between Eagle Materials and Cementos Pacasmayo

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

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

Diversification Opportunities for Eagle Materials and Cementos Pacasmayo

-0.14

Correlation Coefficient

Eagle Materials  Cementos Pacasmayo

Good diversification

The 3 months correlation between Eagle and Cementos is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials 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 Eagle Materials 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 Eagle Materials 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 Eagle Materials i.e., Eagle Materials and Cementos Pacasmayo go up and down completely randomly.

Pair Corralation between Eagle Materials and Cementos Pacasmayo

Considering the 90-day investment horizon Eagle Materials is expected to under-perform the Cementos Pacasmayo. In addition to that, Eagle Materials is 1.02 times more volatile than Cementos Pacasmayo SAA. It trades about -0.07 of its total potential returns per unit of risk. Cementos Pacasmayo SAA is currently generating about 0.1 per unit of volatility. If you would invest  525.00  in Cementos Pacasmayo SAA on December 29, 2024 and sell it today you would earn a total of  55.00  from holding Cementos Pacasmayo SAA or generate 10.48% return on investment over 90 days.

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

Eagle Materials  vs.  Cementos Pacasmayo SAA

Eagle Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Cementos Pacasmayo SAA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cementos Pacasmayo SAA are ranked lower than 8 (%) 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 April 2025.

Pair Trading with Eagle Materials and Cementos Pacasmayo

The main advantage of trading using opposite Eagle Materials and Cementos Pacasmayo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials 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 Eagle Materials 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.