Correlation Between Dycom Industries and Primega Group

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

By analyzing existing cross correlation between Dycom Industries and Primega Group Holdings, you can compare the effects of market volatilities on Dycom Industries and Primega Group 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 Dycom Industries with a short position of Primega Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dycom Industries and Primega Group.

Diversification Opportunities for Dycom Industries and Primega Group

0.15

Correlation Coefficient

Dycom Industries  Primega Group

Average diversification

The 3 months correlation between Dycom and Primega is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dycom Industries and Primega Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primega Group Holdings and Dycom Industries 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 Dycom Industries are associated (or correlated) with Primega Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primega Group Holdings has no effect on the direction of Dycom Industries i.e., Dycom Industries and Primega Group go up and down completely randomly.

Pair Corralation between Dycom Industries and Primega Group

Allowing for the 90-day total investment horizon Dycom Industries is expected to generate 7150.83 times less return on investment than Primega Group. But when comparing it to its historical volatility, Dycom Industries is 41.23 times less risky than Primega Group. It trades about 0.0 of its potential returns per unit of risk. Primega Group Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,781  in Primega Group Holdings on October 24, 2024 and sell it today you would lose (1,670) from holding Primega Group Holdings or give up 93.77% of portfolio value over 90 days.

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

Dycom Industries  vs.  Primega Group Holdings

Dycom Industries

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Dycom Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Dycom Industries is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Primega Group Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Primega Group Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady technical indicators, Primega Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dycom Industries and Primega Group

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

The idea behind Dycom Industries and Primega Group Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.