Correlation Between Indian Oil and Max Financial
Can any of the company-specific risk be diversified away by investing in both Indian Oil 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 Indian Oil and Max Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indian Oil and Max Financial Services, you can compare the effects of market volatilities on Indian Oil 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 Indian Oil with a short position of Max Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Oil and Max Financial.
Diversification Opportunities for Indian Oil and Max Financial
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indian and Max is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Indian Oil 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 Indian Oil 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 Indian Oil 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 Indian Oil i.e., Indian Oil and Max Financial go up and down completely randomly.
Pair Corralation between Indian Oil and Max Financial
Assuming the 90 days trading horizon Indian Oil is expected to generate 0.62 times more return on investment than Max Financial. However, Indian Oil is 1.61 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 -0.16 per unit of risk. If you would invest 13,870 in Indian Oil on September 13, 2024 and sell it today you would earn a total of 278.00 from holding Indian Oil or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indian Oil vs. Max Financial Services
Performance |
| Timeline |
| Indian Oil |
| Max Financial Services |
Indian Oil and Max Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indian Oil and Max Financial
The main advantage of trading using opposite Indian Oil and Max Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Oil 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.| Indian Oil vs. Digjam Limited | Indian Oil vs. Gujarat Raffia Industries | Indian Oil vs. State Bank of | Indian Oil vs. Thomas Scott Limited |
| Max Financial vs. Vodafone Idea Limited | Max Financial vs. Yes Bank Limited | Max Financial vs. Indian Overseas Bank | Max Financial vs. Indian Oil |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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