Correlation Between Lululemon Athletica and Primech Holdings
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Primech Holdings 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 Lululemon Athletica and Primech Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Primech Holdings Ltd, you can compare the effects of market volatilities on Lululemon Athletica and Primech Holdings 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 Lululemon Athletica with a short position of Primech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Primech Holdings.
Diversification Opportunities for Lululemon Athletica and Primech Holdings
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lululemon and Primech is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Primech Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primech Holdings and Lululemon Athletica 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 Lululemon Athletica are associated (or correlated) with Primech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primech Holdings has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Primech Holdings go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Primech Holdings
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 0.44 times more return on investment than Primech Holdings. However, Lululemon Athletica is 2.28 times less risky than Primech Holdings. It trades about 0.15 of its potential returns per unit of risk. Primech Holdings Ltd is currently generating about 0.01 per unit of risk. If you would invest 29,790 in Lululemon Athletica on September 1, 2024 and sell it today you would earn a total of 2,276 from holding Lululemon Athletica or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. Primech Holdings Ltd
Performance |
| Timeline |
| Lululemon Athletica |
| Primech Holdings |
Lululemon Athletica and Primech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Primech Holdings
The main advantage of trading using opposite Lululemon Athletica and Primech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Primech Holdings 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 Primech Holdings will offset losses from the drop in Primech Holdings' long position.| Lululemon Athletica vs. VF Corporation | Lululemon Athletica vs. Levi Strauss Co | Lululemon Athletica vs. Columbia Sportswear | Lululemon Athletica vs. Oxford Industries |
| Primech Holdings vs. The Gap, | Primech Holdings vs. Lululemon Athletica | Primech Holdings vs. Fast Retailing Co | Primech Holdings vs. SEI Investments |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |