Correlation Between Flexible Solutions and Cementos Pacasmayo

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

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

Diversification Opportunities for Flexible Solutions and Cementos Pacasmayo

0.75

Correlation Coefficient

Flexible Solutions  Cementos Pacasmayo

Poor diversification

The 3 months correlation between Flexible and Cementos is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation 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 Flexible Solutions 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 Flexible Solutions International 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 Flexible Solutions i.e., Flexible Solutions and Cementos Pacasmayo go up and down completely randomly.

Pair Corralation between Flexible Solutions and Cementos Pacasmayo

Considering the 90-day investment horizon Flexible Solutions International is expected to generate 4.66 times more return on investment than Cementos Pacasmayo. However, Flexible Solutions is 4.66 times more volatile than Cementos Pacasmayo SAA. It trades about 0.11 of its potential returns per unit of risk. Cementos Pacasmayo SAA is currently generating about 0.1 per unit of risk. If you would invest  361.00  in Flexible Solutions International on December 29, 2024 and sell it today you would earn a total of  154.00  from holding Flexible Solutions International or generate 42.66% return on investment over 90 days.

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

Flexible Solutions Internation  vs.  Cementos Pacasmayo SAA

Flexible Solutions

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flexible Solutions International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Flexible Solutions demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 Flexible Solutions and Cementos Pacasmayo

The main advantage of trading using opposite Flexible Solutions and Cementos Pacasmayo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions 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 Flexible Solutions International 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.