Correlation Between Maxim Power and Firan Technology
Can any of the company-specific risk be diversified away by investing in both Maxim Power and Firan Technology 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 Maxim Power and Firan Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maxim Power Corp and Firan Technology Group, you can compare the effects of market volatilities on Maxim Power and Firan Technology 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 Maxim Power with a short position of Firan Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maxim Power and Firan Technology.
Diversification Opportunities for Maxim Power and Firan Technology
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Maxim and Firan is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Maxim Power Corp and Firan Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firan Technology and Maxim Power 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 Maxim Power Corp are associated (or correlated) with Firan Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firan Technology has no effect on the direction of Maxim Power i.e., Maxim Power and Firan Technology go up and down completely randomly.
Pair Corralation between Maxim Power and Firan Technology
Assuming the 90 days trading horizon Maxim Power Corp is expected to generate 1.73 times more return on investment than Firan Technology. However, Maxim Power is 1.73 times more volatile than Firan Technology Group. It trades about 0.31 of its potential returns per unit of risk. Firan Technology Group is currently generating about 0.24 per unit of risk. If you would invest 411.00 in Maxim Power Corp on August 24, 2024 and sell it today you would earn a total of 103.00 from holding Maxim Power Corp or generate 25.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maxim Power Corp vs. Firan Technology Group
Performance |
| Timeline |
| Maxim Power Corp |
| Firan Technology |
Maxim Power and Firan Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maxim Power and Firan Technology
The main advantage of trading using opposite Maxim Power and Firan Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maxim Power position performs unexpectedly, Firan Technology 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 Firan Technology will offset losses from the drop in Firan Technology's long position.| Maxim Power vs. Caldwell Partners International | Maxim Power vs. Chesswood Group Limited | Maxim Power vs. Mccoy Global | Maxim Power vs. Pulse Seismic |
| Firan Technology vs. ECN Capital Corp | Firan Technology vs. Martinrea International | Firan Technology vs. CCL Industries | Firan Technology vs. FirstService Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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