Correlation Between TVS Electronics and Praxis Home

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

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

Diversification Opportunities for TVS Electronics and Praxis Home

-0.47

Correlation Coefficient

TVS Electronics  Praxis Home

Very good diversification

The 3 months correlation between TVS and Praxis is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding TVS Electronics 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 TVS Electronics 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 TVS Electronics 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 TVS Electronics i.e., TVS Electronics and Praxis Home go up and down completely randomly.

Pair Corralation between TVS Electronics and Praxis Home

Assuming the 90 days trading horizon TVS Electronics Limited is expected to under-perform the Praxis Home. But the stock apears to be less risky and, when comparing its historical volatility, TVS Electronics Limited is 1.27 times less risky than Praxis Home. The stock trades about -0.18 of its potential returns per unit of risk. The Praxis Home Retail is currently generating about 0.2 of returns per unit of risk over similar time horizon. 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

TVS Electronics Limited  vs.  Praxis Home Retail

TVS Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TVS Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 TVS Electronics and Praxis Home

The main advantage of trading using opposite TVS Electronics and Praxis Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TVS Electronics 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 TVS Electronics 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 CEOs Directory module to screen CEOs from public companies around the world.