Correlation Between MIRC Electronics and Praxis Home

Can any of the company-specific risk be diversified away by investing in both MIRC 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 MIRC 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 MIRC Electronics Limited and Praxis Home Retail, you can compare the effects of market volatilities on MIRC 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 MIRC Electronics with a short position of Praxis Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of MIRC Electronics and Praxis Home.

Diversification Opportunities for MIRC Electronics and Praxis Home

0.17

Correlation Coefficient

MIRC Electronics  Praxis Home

Average diversification

The 3 months correlation between MIRC and Praxis is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding MIRC 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 MIRC 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 MIRC 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 MIRC Electronics i.e., MIRC Electronics and Praxis Home go up and down completely randomly.

Pair Corralation between MIRC Electronics and Praxis Home

Assuming the 90 days trading horizon MIRC Electronics Limited is expected to generate 1.0 times more return on investment than Praxis Home. However, MIRC Electronics Limited is 1.0 times less risky than Praxis Home. It trades about -0.03 of its potential returns per unit of risk. Praxis Home Retail is currently generating about -0.08 per unit of risk. If you would invest  2,539  in MIRC Electronics Limited on September 20, 2024 and sell it today you would lose (171.00) from holding MIRC Electronics Limited or give up 6.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

MIRC Electronics Limited  vs.  Praxis Home Retail

MIRC Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MIRC Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, MIRC Electronics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 MIRC Electronics and Praxis Home

The main advantage of trading using opposite MIRC Electronics and Praxis Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MIRC 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 MIRC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.