Correlation Between Praxis Home and Bharat Road

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

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

Diversification Opportunities for Praxis Home and Bharat Road

-0.11

Correlation Coefficient

Praxis Home  Bharat Road

Good diversification

The 3 months correlation between Praxis and Bharat is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Home Retail and Bharat Road Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bharat Road Network and Praxis Home 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 Praxis Home Retail are associated (or correlated) with Bharat Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bharat Road Network has no effect on the direction of Praxis Home i.e., Praxis Home and Bharat Road go up and down completely randomly.

Pair Corralation between Praxis Home and Bharat Road

Assuming the 90 days trading horizon Praxis Home Retail is expected to under-perform the Bharat Road. In addition to that, Praxis Home is 1.14 times more volatile than Bharat Road Network. It trades about -0.25 of its total potential returns per unit of risk. Bharat Road Network is currently generating about 0.26 per unit of volatility. If you would invest  4,144  in Bharat Road Network on September 23, 2024 and sell it today you would earn a total of  515.00  from holding Bharat Road Network or generate 12.43% return on investment over 90 days.

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

Praxis Home Retail  vs.  Bharat Road Network

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bharat Road Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bharat Road Network has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bharat Road is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Praxis Home and Bharat Road

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

The idea behind Praxis Home Retail and Bharat Road Network 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.