Correlation Between Kavveri Telecom and Praxis Home

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

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

Diversification Opportunities for Kavveri Telecom and Praxis Home

-0.15

Correlation Coefficient

Kavveri Telecom  Praxis Home

Good diversification

The 3 months correlation between Kavveri and Praxis is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Kavveri Telecom Products 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 Kavveri Telecom 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 Kavveri Telecom Products 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 Kavveri Telecom i.e., Kavveri Telecom and Praxis Home go up and down completely randomly.

Pair Corralation between Kavveri Telecom and Praxis Home

Assuming the 90 days trading horizon Kavveri Telecom Products is expected to generate 0.99 times more return on investment than Praxis Home. However, Kavveri Telecom Products is 1.01 times less risky than Praxis Home. It trades about 0.21 of its potential returns per unit of risk. Praxis Home Retail is currently generating about 0.04 per unit of risk. If you would invest  770.00  in Kavveri Telecom Products on October 4, 2024 and sell it today you would earn a total of  5,695  from holding Kavveri Telecom Products or generate 739.61% return on investment over 90 days.

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

Kavveri Telecom Products  vs.  Praxis Home Retail

Kavveri Telecom Products

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kavveri Telecom Products are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Kavveri Telecom demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Praxis Home Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Praxis Home Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kavveri Telecom and Praxis Home

The main advantage of trading using opposite Kavveri Telecom and Praxis Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kavveri Telecom 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 Kavveri Telecom Products 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.