Correlation Between Infomedia Press and Praxis Home

Can any of the company-specific risk be diversified away by investing in both Infomedia Press and Praxis Home 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 Infomedia Press and Praxis Home into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Infomedia Press Limited and Praxis Home Retail, you can compare the effects of market volatilities on Infomedia Press and Praxis Home 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 Infomedia Press with a short position of Praxis Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infomedia Press and Praxis Home.

Diversification Opportunities for Infomedia Press and Praxis Home

0.58

Correlation Coefficient

Infomedia Press  Praxis Home

Very weak diversification

The 3 months correlation between Infomedia and Praxis is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Infomedia Press Limited and Praxis Home Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Praxis Home Retail and Infomedia Press 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 Infomedia Press Limited are associated (or correlated) with Praxis Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Praxis Home Retail has no effect on the direction of Infomedia Press i.e., Infomedia Press and Praxis Home go up and down completely randomly.

Pair Corralation between Infomedia Press and Praxis Home

Assuming the 90 days trading horizon Infomedia Press is expected to generate 4.24 times less return on investment than Praxis Home. In addition to that, Infomedia Press is 1.08 times more volatile than Praxis Home Retail. It trades about 0.03 of its total potential returns per unit of risk. Praxis Home Retail is currently generating about 0.16 per unit of volatility. If you would invest  1,683  in Praxis Home Retail on September 5, 2024 and sell it today you would earn a total of  536.00  from holding Praxis Home Retail or generate 31.85% return on investment over 90 days.

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

Infomedia Press Limited  vs.  Praxis Home Retail

Infomedia Press

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Infomedia Press Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Infomedia Press may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Praxis Home Retail

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Praxis Home Retail are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Praxis Home sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infomedia Press and Praxis Home

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

The idea behind Infomedia Press Limited and Praxis Home Retail 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.