Correlation Between Tokyu REIT and Cementos Pacasmayo

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

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

Diversification Opportunities for Tokyu REIT and Cementos Pacasmayo

0.56

Correlation Coefficient

Tokyu REIT  Cementos Pacasmayo

Very weak diversification

The 3 months correlation between Tokyu and Cementos is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Tokyu REIT 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 Tokyu REIT 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 Tokyu REIT 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 Tokyu REIT i.e., Tokyu REIT and Cementos Pacasmayo go up and down completely randomly.

Pair Corralation between Tokyu REIT and Cementos Pacasmayo

If you would invest  466.00  in Cementos Pacasmayo SAA on October 7, 2024 and sell it today you would earn a total of  98.00  from holding Cementos Pacasmayo SAA or generate 21.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.44%
Values	Daily Returns

Tokyu REIT  vs.  Cementos Pacasmayo SAA

Tokyu REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tokyu REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tokyu REIT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Tokyu REIT and Cementos Pacasmayo

The main advantage of trading using opposite Tokyu REIT and Cementos Pacasmayo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokyu REIT 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 Tokyu REIT 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.