Correlation Between Max Financial and General Insuranceof
Can any of the company-specific risk be diversified away by investing in both Max Financial and General Insuranceof 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 Max Financial and General Insuranceof into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Max Financial Services and General Insurance, you can compare the effects of market volatilities on Max Financial and General Insuranceof 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 Max Financial with a short position of General Insuranceof. Check out your portfolio center. Please also check ongoing floating volatility patterns of Max Financial and General Insuranceof.
Diversification Opportunities for Max Financial and General Insuranceof
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Max and General is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Max Financial Services and General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Insuranceof and Max Financial 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 Max Financial Services are associated (or correlated) with General Insuranceof. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Insuranceof has no effect on the direction of Max Financial i.e., Max Financial and General Insuranceof go up and down completely randomly.
Pair Corralation between Max Financial and General Insuranceof
Assuming the 90 days trading horizon Max Financial Services is expected to under-perform the General Insuranceof. But the stock apears to be less risky and, when comparing its historical volatility, Max Financial Services is 1.42 times less risky than General Insuranceof. The stock trades about -0.2 of its potential returns per unit of risk. The General Insurance is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 36,460 in General Insurance on August 30, 2024 and sell it today you would earn a total of 3,130 from holding General Insurance or generate 8.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Max Financial Services vs. General Insurance
Performance |
| Timeline |
| Max Financial Services |
| General Insuranceof |
Max Financial and General Insuranceof Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Max Financial and General Insuranceof
The main advantage of trading using opposite Max Financial and General Insuranceof positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Max Financial position performs unexpectedly, General Insuranceof 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 General Insuranceof will offset losses from the drop in General Insuranceof's long position.| Max Financial vs. JM Financial Limited | Max Financial vs. Vertoz Advertising Limited | Max Financial vs. Tamilnadu Telecommunication Limited | Max Financial vs. Tata Communications Limited |
| General Insuranceof vs. The Orissa Minerals | General Insuranceof vs. DSJ Keep Learning | General Insuranceof vs. Malu Paper Mills | General Insuranceof vs. Kingfa Science Technology |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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