Correlation Between Praxis Home and Reliance Home

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

Diversification Opportunities for Praxis Home and Reliance Home

0.58

Correlation Coefficient

Praxis Home  Reliance Home

Very weak diversification

The 3 months correlation between Praxis and Reliance is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Home Retail and Reliance Home Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Home Finance 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 Reliance Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Home Finance has no effect on the direction of Praxis Home i.e., Praxis Home and Reliance Home go up and down completely randomly.

Pair Corralation between Praxis Home and Reliance Home

Assuming the 90 days trading horizon Praxis Home Retail is expected to generate 0.8 times more return on investment than Reliance Home. However, Praxis Home Retail is 1.25 times less risky than Reliance Home. It trades about 0.18 of its potential returns per unit of risk. Reliance Home Finance is currently generating about -0.13 per unit of risk. If you would invest  1,591  in Praxis Home Retail on September 2, 2024 and sell it today you would earn a total of  597.00  from holding Praxis Home Retail or generate 37.52% return on investment over 90 days.

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

Praxis Home Retail  vs.  Reliance Home Finance

Praxis Home Retail

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Praxis Home Retail are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Praxis Home sustained solid returns over the last few months and may actually be approaching a breakup point.

Reliance Home Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reliance Home Finance 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 basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Praxis Home and Reliance Home

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

The idea behind Praxis Home Retail and Reliance Home Finance 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..