Correlation Between Alger Health and Praxis Small

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

By analyzing existing cross correlation between Alger Health Sciences and Praxis Small Cap, you can compare the effects of market volatilities on Alger Health and Praxis Small 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 Alger Health with a short position of Praxis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Praxis Small.

Diversification Opportunities for Alger Health and Praxis Small

-0.03

Correlation Coefficient

Alger Health  Praxis Small

Good diversification

The 3 months correlation between Alger and Praxis is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Praxis Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Praxis Small Cap and Alger Health 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 Alger Health Sciences are associated (or correlated) with Praxis Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Praxis Small Cap has no effect on the direction of Alger Health i.e., Alger Health and Praxis Small go up and down completely randomly.

Pair Corralation between Alger Health and Praxis Small

Assuming the 90 days horizon Alger Health Sciences is expected to generate 0.94 times more return on investment than Praxis Small. However, Alger Health Sciences is 1.06 times less risky than Praxis Small. It trades about 0.24 of its potential returns per unit of risk. Praxis Small Cap is currently generating about 0.04 per unit of risk. If you would invest  1,185  in Alger Health Sciences on September 16, 2025 and sell it today you would earn a total of  196.00  from holding Alger Health Sciences or generate 16.54% return on investment over 90 days.

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

Alger Health Sciences  vs.  Praxis Small Cap

Alger Health Sciences

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Health Sciences are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Alger Health showed solid returns over the last few months and may actually be approaching a breakup point.

Praxis Small Cap

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Praxis Small Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Praxis Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alger Health and Praxis Small

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

The idea behind Alger Health Sciences and Praxis Small Cap 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.