Correlation Between Primoris Services and Chart Industries

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

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

Diversification Opportunities for Primoris Services and Chart Industries

0.83

Correlation Coefficient

Primoris Services  Chart Industries

Very poor diversification

The 3 months correlation between Primoris and Chart is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Primoris Services and Chart Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chart Industries 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 Chart Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chart Industries has no effect on the direction of Primoris Services i.e., Primoris Services and Chart Industries go up and down completely randomly.

Pair Corralation between Primoris Services and Chart Industries

Given the investment horizon of 90 days Primoris Services is expected to under-perform the Chart Industries. In addition to that, Primoris Services is 1.26 times more volatile than Chart Industries. It trades about -0.08 of its total potential returns per unit of risk. Chart Industries is currently generating about -0.07 per unit of volatility. If you would invest  6,913  in Chart Industries on December 21, 2024 and sell it today you would lose (1,042) from holding Chart Industries or give up 15.07% of portfolio value over 90 days.

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

Primoris Services  vs.  Chart Industries

Primoris Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Primoris Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Chart Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chart Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Preferred Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Primoris Services and Chart Industries

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

The idea behind Primoris Services and Chart Industries 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.