Correlation Between Praxis Home and Arrow Greentech

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

Diversification Opportunities for Praxis Home and Arrow Greentech

-0.08

Correlation Coefficient

Praxis Home  Arrow Greentech

Good diversification

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

Pair Corralation between Praxis Home and Arrow Greentech

Assuming the 90 days trading horizon Praxis Home Retail is expected to under-perform the Arrow Greentech. But the stock apears to be less risky and, when comparing its historical volatility, Praxis Home Retail is 1.1 times less risky than Arrow Greentech. The stock trades about -0.01 of its potential returns per unit of risk. The Arrow Greentech Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  17,409  in Arrow Greentech Limited on September 26, 2024 and sell it today you would earn a total of  63,076  from holding Arrow Greentech Limited or generate 362.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Praxis Home Retail  vs.  Arrow Greentech Limited

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 weak 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.

Arrow Greentech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow Greentech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Arrow Greentech is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Praxis Home and Arrow Greentech

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

The idea behind Praxis Home Retail and Arrow Greentech Limited 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.