Correlation Between Primoris Services and Social Detention

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

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

Diversification Opportunities for Primoris Services and Social Detention

-0.7

Correlation Coefficient

Primoris Services  Social Detention

Excellent diversification

The 3 months correlation between Primoris and Social is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Primoris Services and Social Detention in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Social Detention 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 Social Detention. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Social Detention has no effect on the direction of Primoris Services i.e., Primoris Services and Social Detention go up and down completely randomly.

Pair Corralation between Primoris Services and Social Detention

Given the investment horizon of 90 days Primoris Services is expected to under-perform the Social Detention. But the stock apears to be less risky and, when comparing its historical volatility, Primoris Services is 1.22 times less risky than Social Detention. The stock trades about -0.1 of its potential returns per unit of risk. The Social Detention is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.50  in Social Detention on December 29, 2024 and sell it today you would earn a total of  0.10  from holding Social Detention or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Primoris Services  vs.  Social Detention

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.

Social Detention

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Social Detention are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Social Detention exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Primoris Services and Social Detention

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

The idea behind Primoris Services and Social Detention 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.