Correlation Between Primoris Services and Maanshan Iron
Can any of the company-specific risk be diversified away by investing in both Primoris Services and Maanshan Iron 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 Primoris Services and Maanshan Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primoris Services and Maanshan Iron Steel, you can compare the effects of market volatilities on Primoris Services and Maanshan Iron 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 Primoris Services with a short position of Maanshan Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primoris Services and Maanshan Iron.
Diversification Opportunities for Primoris Services and Maanshan Iron
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Primoris and Maanshan is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Primoris Services and Maanshan Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maanshan Iron Steel and Primoris Services 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 Primoris Services are associated (or correlated) with Maanshan Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maanshan Iron Steel has no effect on the direction of Primoris Services i.e., Primoris Services and Maanshan Iron go up and down completely randomly.
Pair Corralation between Primoris Services and Maanshan Iron
Given the investment horizon of 90 days Primoris Services is expected to under-perform the Maanshan Iron. But the stock apears to be less risky and, when comparing its historical volatility, Primoris Services is 1.42 times less risky than Maanshan Iron. The stock trades about -0.02 of its potential returns per unit of risk. The Maanshan Iron Steel is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Maanshan Iron Steel on November 29, 2024 and sell it today you would earn a total of 3.00 from holding Maanshan Iron Steel or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Primoris Services vs. Maanshan Iron Steel
Performance |
| Timeline |
| Primoris Services |
| Maanshan Iron Steel |
Primoris Services and Maanshan Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primoris Services and Maanshan Iron
The main advantage of trading using opposite Primoris Services and Maanshan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primoris Services position performs unexpectedly, Maanshan Iron 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 Maanshan Iron will offset losses from the drop in Maanshan Iron's long position.| Primoris Services vs. MYR Group | Primoris Services vs. Granite Construction Incorporated | Primoris Services vs. Matrix Service Co | Primoris Services vs. Api Group Corp |
| Maanshan Iron vs. ArcelorMittal SA ADR | Maanshan Iron vs. Gerdau SA ADR | Maanshan Iron vs. POSCO Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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