Correlation Between Cementos Pacasmayo and Loma Negra

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

Diversification Opportunities for Cementos Pacasmayo and Loma Negra

0.03

Correlation Coefficient

Cementos Pacasmayo  Loma Negra

Significant diversification

The 3 months correlation between Cementos and Loma is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cementos Pacasmayo SAA and Loma Negra Compania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loma Negra Compania 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 Loma Negra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loma Negra Compania has no effect on the direction of Cementos Pacasmayo i.e., Cementos Pacasmayo and Loma Negra go up and down completely randomly.

Pair Corralation between Cementos Pacasmayo and Loma Negra

Given the investment horizon of 90 days Cementos Pacasmayo SAA is expected to generate 0.49 times more return on investment than Loma Negra. However, Cementos Pacasmayo SAA is 2.06 times less risky than Loma Negra. It trades about -0.04 of its potential returns per unit of risk. Loma Negra Compania is currently generating about -0.13 per unit of risk. If you would invest  545.00  in Cementos Pacasmayo SAA on January 9, 2025 and sell it today you would lose (25.00) from holding Cementos Pacasmayo SAA or give up 4.59% of portfolio value over 90 days.

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

Cementos Pacasmayo SAA  vs.  Loma Negra Compania

Cementos Pacasmayo SAA

Risk-Adjusted Performance

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.

Loma Negra Compania

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loma Negra Compania has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Cementos Pacasmayo and Loma Negra

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

The idea behind Cementos Pacasmayo SAA and Loma Negra Compania 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.