Correlation Between Maxwell Resource and BASE

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

By analyzing existing cross correlation between Maxwell Resource and BASE Inc, you can compare the effects of market volatilities on Maxwell Resource and BASE 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 Maxwell Resource with a short position of BASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maxwell Resource and BASE.

Diversification Opportunities for Maxwell Resource and BASE

-0.18

Correlation Coefficient

Maxwell Resource  BASE

Good diversification

The 3 months correlation between Maxwell and BASE is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Maxwell Resource and BASE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASE Inc and Maxwell Resource 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 Maxwell Resource are associated (or correlated) with BASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASE Inc has no effect on the direction of Maxwell Resource i.e., Maxwell Resource and BASE go up and down completely randomly.

Pair Corralation between Maxwell Resource and BASE

Given the investment horizon of 90 days Maxwell Resource is expected to generate 15.74 times more return on investment than BASE. However, Maxwell Resource is 15.74 times more volatile than BASE Inc. It trades about 0.12 of its potential returns per unit of risk. BASE Inc is currently generating about 0.12 per unit of risk. If you would invest  1.70  in Maxwell Resource on December 29, 2024 and sell it today you would earn a total of  1.30  from holding Maxwell Resource or generate 76.47% return on investment over 90 days.

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

Maxwell Resource  vs.  BASE Inc

Maxwell Resource

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Maxwell Resource are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Maxwell Resource unveiled solid returns over the last few months and may actually be approaching a breakup point.

BASE Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BASE Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BASE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maxwell Resource and BASE

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

The idea behind Maxwell Resource and BASE Inc 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.