Correlation Between MRF and Max Financial
Can any of the company-specific risk be diversified away by investing in both MRF 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 MRF and Max Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MRF Limited and Max Financial Services, you can compare the effects of market volatilities on MRF 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 MRF with a short position of Max Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MRF and Max Financial.
Diversification Opportunities for MRF and Max Financial
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MRF and Max is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding MRF Limited 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 MRF 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 MRF Limited 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 MRF i.e., MRF and Max Financial go up and down completely randomly.
Pair Corralation between MRF and Max Financial
Assuming the 90 days trading horizon MRF Limited is expected to generate 0.77 times more return on investment than Max Financial. However, MRF Limited is 1.3 times less risky than Max Financial. It trades about 0.02 of its potential returns per unit of risk. Max Financial Services is currently generating about -0.29 per unit of risk. If you would invest 12,412,800 in MRF Limited on August 25, 2024 and sell it today you would earn a total of 46,900 from holding MRF Limited or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MRF Limited vs. Max Financial Services
Performance |
| Timeline |
| MRF Limited |
| Max Financial Services |
MRF and Max Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MRF and Max Financial
The main advantage of trading using opposite MRF and Max Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MRF 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.| MRF vs. Styrenix Performance Materials | MRF vs. Privi Speciality Chemicals | MRF vs. Elgi Rubber | MRF vs. V2 Retail Limited |
| Max Financial vs. MRF Limited | Max Financial vs. Honeywell Automation India | Max Financial vs. Divis Laboratories Limited | Max Financial vs. Indo Borax Chemicals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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