Correlation Between City Union and Max Financial
Can any of the company-specific risk be diversified away by investing in both City Union and Max Financial 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 City Union and Max Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Union Bank and Max Financial Services, you can compare the effects of market volatilities on City Union and Max Financial 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 City Union with a short position of Max Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Union and Max Financial.
Diversification Opportunities for City Union and Max Financial
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between City and Max is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding City Union Bank and Max Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Financial Services and City Union 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 City Union Bank are associated (or correlated) with Max Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Financial Services has no effect on the direction of City Union i.e., City Union and Max Financial go up and down completely randomly.
Pair Corralation between City Union and Max Financial
Assuming the 90 days trading horizon City Union Bank is expected to generate 0.75 times more return on investment than Max Financial. However, City Union Bank is 1.33 times less risky than Max Financial. It trades about 0.09 of its potential returns per unit of risk. Max Financial Services is currently generating about -0.34 per unit of risk. If you would invest 17,574 in City Union Bank on September 1, 2024 and sell it today you would earn a total of 379.00 from holding City Union Bank or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
City Union Bank vs. Max Financial Services
Performance |
| Timeline |
| City Union Bank |
| Max Financial Services |
City Union and Max Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Union and Max Financial
The main advantage of trading using opposite City Union and Max Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Union position performs unexpectedly, Max Financial 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 Max Financial will offset losses from the drop in Max Financial's long position.| City Union vs. Reliance Industrial Infrastructure | City Union vs. NRB Industrial Bearings | City Union vs. Indian Metals Ferro | City Union vs. Shivalik Bimetal Controls |
| Max Financial vs. Sukhjit Starch Chemicals | Max Financial vs. Mangalore Chemicals Fertilizers | Max Financial vs. Steel Authority of | Max Financial vs. Neogen Chemicals Limited |
Check out your portfolio center.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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