Correlation Between Madhav Copper and Praxis Home

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

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

Diversification Opportunities for Madhav Copper and Praxis Home

-0.39

Correlation Coefficient

Madhav Copper  Praxis Home

Very good diversification

The 3 months correlation between Madhav and Praxis is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Madhav Copper 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 Madhav Copper 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 Madhav Copper 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 Madhav Copper i.e., Madhav Copper and Praxis Home go up and down completely randomly.

Pair Corralation between Madhav Copper and Praxis Home

Assuming the 90 days trading horizon Madhav Copper is expected to generate 3.62 times less return on investment than Praxis Home. In addition to that, Madhav Copper is 1.02 times more volatile than Praxis Home Retail. It trades about 0.05 of its total potential returns per unit of risk. Praxis Home Retail is currently generating about 0.2 per unit of volatility. If you would invest  1,591  in Praxis Home Retail on August 31, 2024 and sell it today you would earn a total of  651.00  from holding Praxis Home Retail or generate 40.92% return on investment over 90 days.

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

Madhav Copper Limited  vs.  Praxis Home Retail

Madhav Copper Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Madhav Copper Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Madhav Copper may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Praxis Home Retail

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Praxis Home Retail are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Praxis Home sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Madhav Copper and Praxis Home

The main advantage of trading using opposite Madhav Copper and Praxis Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madhav Copper 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 Madhav Copper 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..