Correlation Between North American and Pulse Seismic

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

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

Diversification Opportunities for North American and Pulse Seismic

-0.68

Correlation Coefficient

North American  Pulse Seismic

Excellent diversification

The 3 months correlation between North and Pulse is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction and Pulse Seismic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulse Seismic and North American 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 North American Construction are associated (or correlated) with Pulse Seismic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulse Seismic has no effect on the direction of North American i.e., North American and Pulse Seismic go up and down completely randomly.

Pair Corralation between North American and Pulse Seismic

Assuming the 90 days trading horizon North American Construction is expected to under-perform the Pulse Seismic. But the stock apears to be less risky and, when comparing its historical volatility, North American Construction is 1.06 times less risky than Pulse Seismic. The stock trades about -0.02 of its potential returns per unit of risk. The Pulse Seismic is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  182.00  in Pulse Seismic on May 6, 2025 and sell it today you would earn a total of  103.00  from holding Pulse Seismic or generate 56.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

North American Construction  vs.  Pulse Seismic

North American Const

Risk-Adjusted Performance

Very Weak

Over the last 90 days North American Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, North American is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pulse Seismic

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pulse Seismic are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, Pulse Seismic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with North American and Pulse Seismic

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

The idea behind North American Construction and Pulse Seismic 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.