Correlation Between Primoris Services and Sterling Construction

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

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

Diversification Opportunities for Primoris Services and Sterling Construction

0.93

Correlation Coefficient

Primoris Services  Sterling Construction

Almost no diversification

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

Pair Corralation between Primoris Services and Sterling Construction

Given the investment horizon of 90 days Primoris Services is expected to generate 0.78 times more return on investment than Sterling Construction. However, Primoris Services is 1.28 times less risky than Sterling Construction. It trades about 0.24 of its potential returns per unit of risk. Sterling Construction is currently generating about 0.16 per unit of risk. If you would invest  9,303  in Primoris Services on August 4, 2025 and sell it today you would earn a total of  4,849  from holding Primoris Services or generate 52.12% return on investment over 90 days.

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

Primoris Services  vs.  Sterling Construction

Primoris Services

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Primoris Services are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Primoris Services displayed solid returns over the last few months and may actually be approaching a breakup point.

Sterling Construction

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Construction are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Sterling Construction disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Primoris Services and Sterling Construction

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

The idea behind Primoris Services and Sterling Construction 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.