Correlation Between IdeaForge Technology and Max Financial

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

By analyzing existing cross correlation between ideaForge Technology Limited and Max Financial Services, you can compare the effects of market volatilities on IdeaForge Technology and Max Financial 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 IdeaForge Technology with a short position of Max Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of IdeaForge Technology and Max Financial.

Diversification Opportunities for IdeaForge Technology and Max Financial

-0.09

Correlation Coefficient

IdeaForge Technology  Max Financial

Good diversification

The 3 months correlation between IdeaForge and Max is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding ideaForge Technology Limited and Max Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Financial Services and IdeaForge Technology 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 ideaForge Technology Limited are associated (or correlated) with Max Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Financial Services has no effect on the direction of IdeaForge Technology i.e., IdeaForge Technology and Max Financial go up and down completely randomly.

Pair Corralation between IdeaForge Technology and Max Financial

Assuming the 90 days trading horizon ideaForge Technology Limited is expected to generate 2.06 times more return on investment than Max Financial. However, IdeaForge Technology is 2.06 times more volatile than Max Financial Services. It trades about 0.05 of its potential returns per unit of risk. Max Financial Services is currently generating about -0.32 per unit of risk. If you would invest  63,445  in ideaForge Technology Limited on October 8, 2024 and sell it today you would earn a total of  1,135  from holding ideaForge Technology Limited or generate 1.79% return on investment over 90 days.

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

ideaForge Technology Limited  vs.  Max Financial Services

ideaForge Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ideaForge Technology Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IdeaForge Technology is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Max Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Max Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Max Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IdeaForge Technology and Max Financial

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

The idea behind ideaForge Technology Limited and Max Financial Services 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.