Correlation Between Praxis Home and Indian Overseas

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

Diversification Opportunities for Praxis Home and Indian Overseas

0.08

Correlation Coefficient

Praxis Home  Indian Overseas

Significant diversification

The 3 months correlation between Praxis and Indian is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Home Retail and Indian Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Overseas Bank 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 Indian Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Overseas Bank has no effect on the direction of Praxis Home i.e., Praxis Home and Indian Overseas go up and down completely randomly.

Pair Corralation between Praxis Home and Indian Overseas

Assuming the 90 days trading horizon Praxis Home Retail is expected to generate 1.65 times more return on investment than Indian Overseas. However, Praxis Home is 1.65 times more volatile than Indian Overseas Bank. It trades about -0.04 of its potential returns per unit of risk. Indian Overseas Bank is currently generating about -0.36 per unit of risk. If you would invest  2,140  in Praxis Home Retail on October 9, 2024 and sell it today you would lose (61.00) from holding Praxis Home Retail or give up 2.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Praxis Home Retail  vs.  Indian Overseas Bank

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.

Indian Overseas Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indian Overseas Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Praxis Home and Indian Overseas

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

The idea behind Praxis Home Retail and Indian Overseas Bank 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.