Correlation Between Anhui Conch and Cementos Pacasmayo

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

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

Diversification Opportunities for Anhui Conch and Cementos Pacasmayo

0.41

Correlation Coefficient

Anhui Conch  Cementos Pacasmayo

Very weak diversification

The 3 months correlation between Anhui and Cementos is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Conch Cement 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 Anhui Conch 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 Anhui Conch Cement 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 Anhui Conch i.e., Anhui Conch and Cementos Pacasmayo go up and down completely randomly.

Pair Corralation between Anhui Conch and Cementos Pacasmayo

Assuming the 90 days horizon Anhui Conch Cement is expected to generate 2.84 times more return on investment than Cementos Pacasmayo. However, Anhui Conch is 2.84 times more volatile than Cementos Pacasmayo SAA. It trades about 0.07 of its potential returns per unit of risk. Cementos Pacasmayo SAA is currently generating about 0.03 per unit of risk. If you would invest  217.00  in Anhui Conch Cement on September 2, 2024 and sell it today you would earn a total of  40.00  from holding Anhui Conch Cement or generate 18.43% return on investment over 90 days.

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

Anhui Conch Cement  vs.  Cementos Pacasmayo SAA

Anhui Conch Cement

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Conch Cement are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Anhui Conch reported solid returns over the last few months and may actually be approaching a breakup point.

Cementos Pacasmayo SAA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cementos Pacasmayo SAA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Anhui Conch and Cementos Pacasmayo

The main advantage of trading using opposite Anhui Conch and Cementos Pacasmayo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Conch 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 Anhui Conch Cement 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.