Correlation Between Maxim Power and China Resources
Can any of the company-specific risk be diversified away by investing in both Maxim Power and China Resources 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 China Resources 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 China Resources Power, you can compare the effects of market volatilities on Maxim Power and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maxim Power and China Resources.
Diversification Opportunities for Maxim Power and China Resources
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Maxim and China is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Maxim Power Corp and China Resources Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Power 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Power has no effect on the direction of Maxim Power i.e., Maxim Power and China Resources go up and down completely randomly.
Pair Corralation between Maxim Power and China Resources
If you would invest 302.00 in Maxim Power Corp on September 3, 2024 and sell it today you would earn a total of 62.00 from holding Maxim Power Corp or generate 20.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maxim Power Corp vs. China Resources Power
Performance |
| Timeline |
| Maxim Power Corp |
| China Resources Power |
Maxim Power and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maxim Power and China Resources
The main advantage of trading using opposite Maxim Power and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maxim Power position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.The idea behind Maxim Power Corp and China Resources Power pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| China Resources vs. Archrock | China Resources vs. Air Products and | China Resources vs. Cheniere Energy Partners | China Resources vs. Axalta Coating Systems |
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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