Correlation Between Cementos Pacasmayo and Telecom

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

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

Diversification Opportunities for Cementos Pacasmayo and Telecom

-0.42

Correlation Coefficient

Cementos Pacasmayo  Telecom

Very good diversification

The 3 months correlation between Cementos and Telecom is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and Telecom Italia Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Italia Capital and Cementos Pacasmayo 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 Cementos Pacasmayo SAA are associated (or correlated) with Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Italia Capital has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and Telecom go up and down completely randomly.

Pair Corralation between Cementos Pacasmayo and Telecom

Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to generate 0.83 times more return on investment than Telecom. However, Cementos Pacasmayo SAA is 1.2 times less risky than Telecom. It trades about 0.06 of its potential returns per unit of risk. Telecom Italia Capital is currently generating about -0.14 per unit of risk. If you would invest  529.00  in Cementos Pacasmayo SAA on September 23, 2024 and sell it today you would earn a total of  27.00  from holding Cementos Pacasmayo SAA or generate 5.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Cementos Pacasmayo SAA  vs.  Telecom Italia Capital

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 sound basic indicators, Cementos Pacasmayo is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Telecom Italia Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telecom Italia Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for Telecom Italia Capital investors.

Pair Trading with Cementos Pacasmayo and Telecom

The main advantage of trading using opposite Cementos Pacasmayo and Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cementos Pacasmayo position performs unexpectedly, Telecom 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 Telecom will offset losses from the drop in Telecom's long position.

The idea behind Cementos Pacasmayo SAA and Telecom Italia Capital 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.