Correlation Between Primoris Services and BKV

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

By analyzing existing cross correlation between Primoris Services and BKV Corporation, you can compare the effects of market volatilities on Primoris Services and BKV 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 BKV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primoris Services and BKV.

Diversification Opportunities for Primoris Services and BKV

0.84

Correlation Coefficient

Primoris Services  BKV

Very poor diversification

The 3 months correlation between Primoris and BKV is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Primoris Services and BKV Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKV Corporation 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 BKV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKV Corporation has no effect on the direction of Primoris Services i.e., Primoris Services and BKV go up and down completely randomly.

Pair Corralation between Primoris Services and BKV

Given the investment horizon of 90 days Primoris Services is expected to under-perform the BKV. But the stock apears to be less risky and, when comparing its historical volatility, Primoris Services is 1.03 times less risky than BKV. The stock trades about 0.0 of its potential returns per unit of risk. The BKV Corporation is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,158  in BKV Corporation on October 10, 2024 and sell it today you would earn a total of  184.00  from holding BKV Corporation or generate 8.53% return on investment over 90 days.

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

Primoris Services  vs.  BKV Corp.

Primoris Services

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primoris Services are ranked lower than 13 (%) 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.

BKV Corporation

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Primoris Services and BKV

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

The idea behind Primoris Services and BKV Corporation 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.