Correlation Between Cementos Pacasmayo and Eldorado Gold

Can any of the company-specific risk be diversified away by investing in both Cementos Pacasmayo and Eldorado Gold 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 Eldorado Gold 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 Eldorado Gold Corp, you can compare the effects of market volatilities on Cementos Pacasmayo and Eldorado Gold 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 Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cementos Pacasmayo and Eldorado Gold.

Diversification Opportunities for Cementos Pacasmayo and Eldorado Gold

-0.44

Correlation Coefficient

Cementos Pacasmayo  Eldorado Gold

Very good diversification

The 3 months correlation between Cementos and Eldorado is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp 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 Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and Eldorado Gold go up and down completely randomly.

Pair Corralation between Cementos Pacasmayo and Eldorado Gold

Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to generate 0.8 times more return on investment than Eldorado Gold. However, Cementos Pacasmayo SAA is 1.25 times less risky than Eldorado Gold. It trades about 0.21 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about -0.35 per unit of risk. If you would invest  578.00  in Cementos Pacasmayo SAA on August 19, 2024 and sell it today you would earn a total of  54.00  from holding Cementos Pacasmayo SAA or generate 9.34% return on investment over 90 days.

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

Cementos Pacasmayo SAA  vs.  Eldorado Gold Corp

Cementos Pacasmayo SAA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cementos Pacasmayo SAA are ranked lower than 10 (%) 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.

Eldorado Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eldorado Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Cementos Pacasmayo and Eldorado Gold

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

The idea behind Cementos Pacasmayo SAA and Eldorado Gold Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.