Correlation Between Aquagold International and Maxim Power

Can any of the company-specific risk be diversified away by investing in both Aquagold International and Maxim Power 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 Aquagold International and Maxim Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquagold International and Maxim Power Corp, you can compare the effects of market volatilities on Aquagold International and Maxim Power 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 Aquagold International with a short position of Maxim Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Maxim Power.

Diversification Opportunities for Aquagold International and Maxim Power

-0.33

Correlation Coefficient

Aquagold International  Maxim Power

Very good diversification

The 3 months correlation between Aquagold and Maxim is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Maxim Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxim Power Corp and Aquagold International 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 Aquagold International are associated (or correlated) with Maxim Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxim Power Corp has no effect on the direction of Aquagold International i.e., Aquagold International and Maxim Power go up and down completely randomly.

Pair Corralation between Aquagold International and Maxim Power

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Maxim Power. In addition to that, Aquagold International is 3.75 times more volatile than Maxim Power Corp. It trades about -0.16 of its total potential returns per unit of risk. Maxim Power Corp is currently generating about 0.19 per unit of volatility. If you would invest  325.00  in Maxim Power Corp on October 9, 2024 and sell it today you would earn a total of  96.00  from holding Maxim Power Corp or generate 29.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aquagold International  vs.  Maxim Power Corp

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Maxim Power Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Maxim Power Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Maxim Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquagold International and Maxim Power

The main advantage of trading using opposite Aquagold International and Maxim Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International position performs unexpectedly, Maxim Power 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 Maxim Power will offset losses from the drop in Maxim Power's long position.

The idea behind Aquagold International and Maxim Power Corp 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.