Correlation Between LithiumBank Resources and Cementos Pacasmayo

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

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

Diversification Opportunities for LithiumBank Resources and Cementos Pacasmayo

-0.9

Correlation Coefficient

LithiumBank Resources  Cementos Pacasmayo

Pay attention - limited upside

The 3 months correlation between LithiumBank and Cementos is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding LithiumBank Resources Corp 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 LithiumBank Resources 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 LithiumBank Resources Corp 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 LithiumBank Resources i.e., LithiumBank Resources and Cementos Pacasmayo go up and down completely randomly.

Pair Corralation between LithiumBank Resources and Cementos Pacasmayo

Assuming the 90 days horizon LithiumBank Resources Corp is expected to under-perform the Cementos Pacasmayo. In addition to that, LithiumBank Resources is 1.99 times more volatile than Cementos Pacasmayo SAA. It trades about -0.21 of its total potential returns per unit of risk. Cementos Pacasmayo SAA is currently generating about 0.09 per unit of volatility. If you would invest  582.00  in Cementos Pacasmayo SAA on September 18, 2024 and sell it today you would earn a total of  16.00  from holding Cementos Pacasmayo SAA or generate 2.75% return on investment over 90 days.

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

LithiumBank Resources Corp  vs.  Cementos Pacasmayo SAA

LithiumBank Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LithiumBank Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cementos Pacasmayo SAA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cementos Pacasmayo SAA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Cementos Pacasmayo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LithiumBank Resources and Cementos Pacasmayo

The main advantage of trading using opposite LithiumBank Resources and Cementos Pacasmayo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LithiumBank Resources 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 LithiumBank Resources Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.