Correlation Between Primech Holdings and Bank of America
Can any of the company-specific risk be diversified away by investing in both Primech Holdings and Bank of America 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 Primech Holdings and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primech Holdings Ltd and Bank of America, you can compare the effects of market volatilities on Primech Holdings and Bank of America 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 Primech Holdings with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primech Holdings and Bank of America.
Diversification Opportunities for Primech Holdings and Bank of America
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Primech and Bank is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Primech Holdings Ltd and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America and Primech Holdings 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 Primech Holdings Ltd are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Primech Holdings i.e., Primech Holdings and Bank of America go up and down completely randomly.
Pair Corralation between Primech Holdings and Bank of America
Given the investment horizon of 90 days Primech Holdings Ltd is expected to generate 9.01 times more return on investment than Bank of America. However, Primech Holdings is 9.01 times more volatile than Bank of America. It trades about 0.02 of its potential returns per unit of risk. Bank of America is currently generating about 0.0 per unit of risk. If you would invest 79.00 in Primech Holdings Ltd on August 28, 2024 and sell it today you would lose (2.00) from holding Primech Holdings Ltd or give up 2.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Primech Holdings Ltd vs. Bank of America
Performance |
| Timeline |
| Primech Holdings |
| Bank of America |
Primech Holdings and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primech Holdings and Bank of America
The main advantage of trading using opposite Primech Holdings and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primech Holdings position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Primech Holdings vs. Bank of America | Primech Holdings vs. Old Republic International | Primech Holdings vs. Western Asset Investment | Primech Holdings vs. CapitaLand Investment Limited |
| Bank of America vs. Bank of America | Bank of America vs. Bank of America | Bank of America vs. China Construction Bank | Bank of America vs. Bank of America |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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