Correlation Between Bajaj Healthcare and Praxis Home

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Can any of the company-specific risk be diversified away by investing in both Bajaj Healthcare 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 Bajaj Healthcare and Praxis Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bajaj Healthcare Limited and Praxis Home Retail, you can compare the effects of market volatilities on Bajaj Healthcare 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 Bajaj Healthcare with a short position of Praxis Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bajaj Healthcare and Praxis Home.

Diversification Opportunities for Bajaj Healthcare and Praxis Home

BajajPraxisDiversified AwayBajajPraxisDiversified Away100%
-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Bajaj and Praxis is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Healthcare 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 Bajaj Healthcare 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 Bajaj Healthcare 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 Bajaj Healthcare i.e., Bajaj Healthcare and Praxis Home go up and down completely randomly.

Pair Corralation between Bajaj Healthcare and Praxis Home

Assuming the 90 days trading horizon Bajaj Healthcare Limited is expected to generate 2.54 times more return on investment than Praxis Home. However, Bajaj Healthcare is 2.54 times more volatile than Praxis Home Retail. It trades about 0.26 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  39,150  in Bajaj Healthcare Limited on September 23, 2024 and sell it today you would earn a total of  14,240  from holding Bajaj Healthcare Limited or generate 36.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Bajaj Healthcare Limited  vs.  Praxis Home Retail

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -10-5051015
JavaScript chart by amCharts 3.21.15BAJAJHCARE PRAXIS
       Timeline  
Bajaj Healthcare 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Bajaj Healthcare Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Bajaj Healthcare exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec350400450500550600
Praxis Home Retail 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec19202122232425262728

Bajaj Healthcare and Praxis Home Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-12.79-9.58-6.37-3.160.03.336.7810.2213.6717.11 0.010.020.030.040.05
JavaScript chart by amCharts 3.21.15BAJAJHCARE PRAXIS
       Returns  

Pair Trading with Bajaj Healthcare and Praxis Home

The main advantage of trading using opposite Bajaj Healthcare and Praxis Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bajaj Healthcare 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 Bajaj Healthcare 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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