Correlation Between Usha Martin and Praxis Home

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

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

Diversification Opportunities for Usha Martin and Praxis Home

-0.42

Correlation Coefficient

Usha Martin  Praxis Home

Very good diversification

The 3 months correlation between Usha and Praxis is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Usha Martin Education 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 Usha Martin 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 Usha Martin Education 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 Usha Martin i.e., Usha Martin and Praxis Home go up and down completely randomly.

Pair Corralation between Usha Martin and Praxis Home

Assuming the 90 days trading horizon Usha Martin Education is expected to generate 1.46 times more return on investment than Praxis Home. However, Usha Martin is 1.46 times more volatile than Praxis Home Retail. It trades about 0.13 of its potential returns per unit of risk. Praxis Home Retail is currently generating about -0.25 per unit of risk. If you would invest  651.00  in Usha Martin Education on September 23, 2024 and sell it today you would earn a total of  62.00  from holding Usha Martin Education or generate 9.52% return on investment over 90 days.

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

Usha Martin Education  vs.  Praxis Home Retail

Usha Martin Education

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Usha Martin Education are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Usha Martin exhibited 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Usha Martin and Praxis Home

The main advantage of trading using opposite Usha Martin and Praxis Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Usha Martin 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 Usha Martin Education 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.