Correlation Between Wang Lee and Primoris Services

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

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

Diversification Opportunities for Wang Lee and Primoris Services

0.53

Correlation Coefficient

Wang Lee  Primoris Services

Very weak diversification

The 3 months correlation between Wang and Primoris is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Wang Lee Group, and Primoris Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primoris Services and Wang Lee 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 Wang Lee Group, are associated (or correlated) with Primoris Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primoris Services has no effect on the direction of Wang Lee i.e., Wang Lee and Primoris Services go up and down completely randomly.

Pair Corralation between Wang Lee and Primoris Services

Given the investment horizon of 90 days Wang Lee Group, is expected to generate 5.08 times more return on investment than Primoris Services. However, Wang Lee is 5.08 times more volatile than Primoris Services. It trades about 0.04 of its potential returns per unit of risk. Primoris Services is currently generating about 0.12 per unit of risk. If you would invest  310.00  in Wang Lee Group, on October 6, 2024 and sell it today you would lose (121.00) from holding Wang Lee Group, or give up 39.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.53%
Values	Daily Returns

Wang Lee Group,  vs.  Primoris Services

Wang Lee Group,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wang Lee Group, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Wang Lee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Primoris Services

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primoris Services are ranked lower than 12 (%) 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.

Pair Trading with Wang Lee and Primoris Services

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

The idea behind Wang Lee Group, and Primoris 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.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.