Correlation Between Energy Of and Maxim Power

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Can any of the company-specific risk be diversified away by investing in both Energy Of 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 Energy Of and Maxim Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy of Minas and Maxim Power Corp, you can compare the effects of market volatilities on Energy Of 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 Energy Of with a short position of Maxim Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Of and Maxim Power.

Diversification Opportunities for Energy Of and Maxim Power

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Energy and Maxim is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Energy of Minas 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 Energy Of 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 Energy of Minas 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 Energy Of i.e., Energy Of and Maxim Power go up and down completely randomly.

Pair Corralation between Energy Of and Maxim Power

Assuming the 90 days horizon Energy of Minas is expected to under-perform the Maxim Power. In addition to that, Energy Of is 1.22 times more volatile than Maxim Power Corp. It trades about 0.0 of its total potential returns per unit of risk. Maxim Power Corp is currently generating about 0.02 per unit of volatility. If you would invest  331.00  in Maxim Power Corp on October 3, 2024 and sell it today you would earn a total of  27.00  from holding Maxim Power Corp or generate 8.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Energy of Minas  vs.  Maxim Power Corp

 Performance 
       Timeline  
Energy of Minas 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Energy of Minas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
Maxim Power Corp 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Maxim Power Corp are ranked lower than 12 (%) 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.

Energy Of and Maxim Power Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Energy Of and Maxim Power

The main advantage of trading using opposite Energy Of and Maxim Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Of 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 Energy of Minas 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.
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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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