Correlation Between Primoris Services and Hawkins

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

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

Diversification Opportunities for Primoris Services and Hawkins

0.4

Correlation Coefficient

Primoris Services  Hawkins

Very weak diversification

The 3 months correlation between Primoris and Hawkins is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Primoris Services and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Primoris Services i.e., Primoris Services and Hawkins go up and down completely randomly.

Pair Corralation between Primoris Services and Hawkins

Given the investment horizon of 90 days Primoris Services is expected to generate 0.99 times more return on investment than Hawkins. However, Primoris Services is 1.01 times less risky than Hawkins. It trades about 0.21 of its potential returns per unit of risk. Hawkins is currently generating about 0.02 per unit of risk. If you would invest  6,349  in Primoris Services on October 26, 2024 and sell it today you would earn a total of  2,448  from holding Primoris Services or generate 38.56% return on investment over 90 days.

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

Primoris Services  vs.  Hawkins

Primoris Services

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Primoris Services are ranked lower than 16 (%) 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.

Hawkins

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Hawkins is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Primoris Services and Hawkins

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

The idea behind Primoris Services and Hawkins 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.