Correlation Between Maanshan Iron and Primoris Services
Can any of the company-specific risk be diversified away by investing in both Maanshan Iron 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 Maanshan Iron and Primoris Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maanshan Iron Steel and Primoris Services, you can compare the effects of market volatilities on Maanshan Iron 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 Maanshan Iron with a short position of Primoris Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maanshan Iron and Primoris Services.
Diversification Opportunities for Maanshan Iron and Primoris Services
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Maanshan and Primoris is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Maanshan Iron Steel and Primoris Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primoris Services and Maanshan Iron 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 Maanshan Iron Steel 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 Maanshan Iron i.e., Maanshan Iron and Primoris Services go up and down completely randomly.
Pair Corralation between Maanshan Iron and Primoris Services
Assuming the 90 days horizon Maanshan Iron Steel is expected to under-perform the Primoris Services. In addition to that, Maanshan Iron is 1.23 times more volatile than Primoris Services. It trades about -0.22 of its total potential returns per unit of risk. Primoris Services is currently generating about 0.39 per unit of volatility. If you would invest 6,359 in Primoris Services on September 2, 2024 and sell it today you would earn a total of 2,012 from holding Primoris Services or generate 31.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maanshan Iron Steel vs. Primoris Services
Performance |
| Timeline |
| Maanshan Iron Steel |
| Primoris Services |
Maanshan Iron and Primoris Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maanshan Iron and Primoris Services
The main advantage of trading using opposite Maanshan Iron and Primoris Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maanshan Iron 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.| Maanshan Iron vs. ArcelorMittal SA ADR | Maanshan Iron vs. Gerdau SA ADR | Maanshan Iron vs. POSCO Holdings |
| Primoris Services vs. MYR Group | Primoris Services vs. Granite Construction Incorporated | Primoris Services vs. Matrix Service Co | Primoris Services vs. Api Group Corp |
Check out your portfolio center.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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