Correlation Between SOUTHERN and Cementos Pacasmayo

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

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

Diversification Opportunities for SOUTHERN and Cementos Pacasmayo

-0.51

Correlation Coefficient

SOUTHERN  Cementos Pacasmayo

Excellent diversification

The 3 months correlation between SOUTHERN and Cementos is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHERN PER 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 SOUTHERN 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 SOUTHERN PER 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 SOUTHERN i.e., SOUTHERN and Cementos Pacasmayo go up and down completely randomly.

Pair Corralation between SOUTHERN and Cementos Pacasmayo

If you would invest  454.00  in Cementos Pacasmayo SAA on October 4, 2024 and sell it today you would earn a total of  69.00  from holding Cementos Pacasmayo SAA or generate 15.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.2%
Values	Daily Returns

SOUTHERN PER CORP  vs.  Cementos Pacasmayo SAA

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOUTHERN PER CORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SOUTHERN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cementos Pacasmayo SAA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cementos Pacasmayo SAA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Cementos Pacasmayo is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SOUTHERN and Cementos Pacasmayo

The main advantage of trading using opposite SOUTHERN and Cementos Pacasmayo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHERN 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 SOUTHERN PER 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.