Correlation Between Maxim Power and JEMTEC
Can any of the company-specific risk be diversified away by investing in both Maxim Power and JEMTEC 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 JEMTEC 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 JEMTEC Inc, you can compare the effects of market volatilities on Maxim Power and JEMTEC 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 JEMTEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maxim Power and JEMTEC.
Diversification Opportunities for Maxim Power and JEMTEC
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Maxim and JEMTEC is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Maxim Power Corp and JEMTEC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JEMTEC Inc 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 JEMTEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JEMTEC Inc has no effect on the direction of Maxim Power i.e., Maxim Power and JEMTEC go up and down completely randomly.
Pair Corralation between Maxim Power and JEMTEC
Assuming the 90 days trading horizon Maxim Power Corp is expected to generate 0.73 times more return on investment than JEMTEC. However, Maxim Power Corp is 1.37 times less risky than JEMTEC. It trades about 0.31 of its potential returns per unit of risk. JEMTEC Inc is currently generating about 0.18 per unit of risk. If you would invest 347.00 in Maxim Power Corp on September 13, 2024 and sell it today you would earn a total of 166.00 from holding Maxim Power Corp or generate 47.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maxim Power Corp vs. JEMTEC Inc
Performance |
| Timeline |
| Maxim Power Corp |
| JEMTEC Inc |
Maxim Power and JEMTEC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maxim Power and JEMTEC
The main advantage of trading using opposite Maxim Power and JEMTEC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maxim Power position performs unexpectedly, JEMTEC 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 JEMTEC will offset losses from the drop in JEMTEC'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 |
| JEMTEC vs. Goodfood Market Corp | JEMTEC vs. Cogeco Communications | JEMTEC vs. CVW CleanTech | JEMTEC vs. Verizon Communications CDR |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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