Correlation Between PROCTER and Primoris Services

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

By analyzing existing cross correlation between PROCTER GAMBLE 285 and Primoris Services, you can compare the effects of market volatilities on PROCTER and Primoris Services 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 PROCTER with a short position of Primoris Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROCTER and Primoris Services.

Diversification Opportunities for PROCTER and Primoris Services

-0.65

Correlation Coefficient

PROCTER  Primoris Services

Excellent diversification

The 3 months correlation between PROCTER and Primoris is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding PROCTER GAMBLE 285 and Primoris Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primoris Services and PROCTER 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 PROCTER GAMBLE 285 are associated (or correlated) with Primoris Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primoris Services has no effect on the direction of PROCTER i.e., PROCTER and Primoris Services go up and down completely randomly.

Pair Corralation between PROCTER and Primoris Services

Assuming the 90 days trading horizon PROCTER is expected to generate 134.31 times less return on investment than Primoris Services. But when comparing it to its historical volatility, PROCTER GAMBLE 285 is 5.05 times less risky than Primoris Services. It trades about 0.01 of its potential returns per unit of risk. Primoris Services is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  5,010  in Primoris Services on September 5, 2024 and sell it today you would earn a total of  3,349  from holding Primoris Services or generate 66.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

PROCTER GAMBLE 285  vs.  Primoris Services

PROCTER GAMBLE 285

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROCTER GAMBLE 285 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PROCTER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Primoris Services

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Primoris Services are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Primoris Services displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PROCTER and Primoris Services

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

The idea behind PROCTER GAMBLE 285 and Primoris Services 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.