Correlation Between Primary Health and Bytes Technology

Can any of the company-specific risk be diversified away by investing in both Primary Health and Bytes Technology 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 Primary Health and Bytes Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Primary Health Properties and Bytes Technology, you can compare the effects of market volatilities on Primary Health and Bytes Technology 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 Primary Health with a short position of Bytes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primary Health and Bytes Technology.

Diversification Opportunities for Primary Health and Bytes Technology

0.92

Correlation Coefficient

Primary Health  Bytes Technology

Almost no diversification

The 3 months correlation between Primary and Bytes is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Primary Health Properties and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology and Primary Health 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 Primary Health Properties are associated (or correlated) with Bytes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bytes Technology has no effect on the direction of Primary Health i.e., Primary Health and Bytes Technology go up and down completely randomly.

Pair Corralation between Primary Health and Bytes Technology

Assuming the 90 days trading horizon Primary Health Properties is expected to generate 0.53 times more return on investment than Bytes Technology. However, Primary Health Properties is 1.87 times less risky than Bytes Technology. It trades about -0.12 of its potential returns per unit of risk. Bytes Technology is currently generating about -0.15 per unit of risk. If you would invest  10,025  in Primary Health Properties on September 28, 2024 and sell it today you would lose (775.00) from holding Primary Health Properties or give up 7.73% of portfolio value over 90 days.

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

Primary Health Properties  vs.  Bytes Technology

Primary Health Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Primary Health Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Bytes Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bytes Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Primary Health and Bytes Technology

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

The idea behind Primary Health Properties and Bytes Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.