Correlation Between Construction Partners and Quanta Services

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

By analyzing existing cross correlation between Construction Partners and Quanta Services, you can compare the effects of market volatilities on Construction Partners and Quanta Services 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 Construction Partners with a short position of Quanta Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction Partners and Quanta Services.

Diversification Opportunities for Construction Partners and Quanta Services

0.93

Correlation Coefficient

Construction Partners  Quanta Services

Almost no diversification

The 3 months correlation between Construction and Quanta is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Construction Partners and Quanta Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Services and Construction Partners 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 Construction Partners are associated (or correlated) with Quanta Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Services has no effect on the direction of Construction Partners i.e., Construction Partners and Quanta Services go up and down completely randomly.

Pair Corralation between Construction Partners and Quanta Services

Given the investment horizon of 90 days Construction Partners is expected to under-perform the Quanta Services. But the stock apears to be less risky and, when comparing its historical volatility, Construction Partners is 1.04 times less risky than Quanta Services. The stock trades about -0.1 of its potential returns per unit of risk. The Quanta Services is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  31,888  in Quanta Services on December 30, 2024 and sell it today you would lose (6,459) from holding Quanta Services or give up 20.26% of portfolio value over 90 days.

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

Construction Partners  vs.  Quanta Services

Construction Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Construction Partners 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 basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Quanta Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quanta Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Construction Partners and Quanta Services

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

The idea behind Construction Partners and Quanta Services 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.