Correlation Between Primary Health and Darden Restaurants

Can any of the company-specific risk be diversified away by investing in both Primary Health and Darden Restaurants 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 Darden Restaurants 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 Darden Restaurants, you can compare the effects of market volatilities on Primary Health and Darden Restaurants 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 Darden Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primary Health and Darden Restaurants.

Diversification Opportunities for Primary Health and Darden Restaurants

-0.01

Correlation Coefficient

Primary Health  Darden Restaurants

Good diversification

The 3 months correlation between Primary and Darden is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Primary Health Properties and Darden Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants 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 Darden Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darden Restaurants has no effect on the direction of Primary Health i.e., Primary Health and Darden Restaurants go up and down completely randomly.

Pair Corralation between Primary Health and Darden Restaurants

Assuming the 90 days trading horizon Primary Health Properties is expected to under-perform the Darden Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, Primary Health Properties is 1.35 times less risky than Darden Restaurants. The stock trades about -0.06 of its potential returns per unit of risk. The Darden Restaurants is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  19,866  in Darden Restaurants on April 21, 2025 and sell it today you would earn a total of  881.00  from holding Darden Restaurants or generate 4.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Primary Health Properties  vs.  Darden Restaurants

Primary Health Properties

Risk-Adjusted Performance

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 rather sound technical and fundamental indicators, Primary Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Darden Restaurants

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Darden Restaurants are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Darden Restaurants is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Primary Health and Darden Restaurants

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

The idea behind Primary Health Properties and Darden Restaurants 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.