Correlation Between Max Healthcare and Den Networks

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

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

Diversification Opportunities for Max Healthcare and Den Networks

0.78

Correlation Coefficient

Max Healthcare  Den Networks

Poor diversification

The 3 months correlation between Max and Den is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Max Healthcare Institute and Den Networks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Den Networks Limited and Max Healthcare 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 Max Healthcare Institute are associated (or correlated) with Den Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Den Networks Limited has no effect on the direction of Max Healthcare i.e., Max Healthcare and Den Networks go up and down completely randomly.

Pair Corralation between Max Healthcare and Den Networks

Assuming the 90 days trading horizon Max Healthcare Institute is expected to generate 1.0 times more return on investment than Den Networks. However, Max Healthcare is 1.0 times more volatile than Den Networks Limited. It trades about 0.01 of its potential returns per unit of risk. Den Networks Limited is currently generating about -0.13 per unit of risk. If you would invest  114,110  in Max Healthcare Institute on December 21, 2024 and sell it today you would lose (525.00) from holding Max Healthcare Institute or give up 0.46% of portfolio value over 90 days.

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

Max Healthcare Institute  vs.  Den Networks Limited

Max Healthcare Institute

Risk-Adjusted Performance

Very Weak

Over the last 90 days Max Healthcare Institute has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Max Healthcare is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Den Networks Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Den Networks Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Max Healthcare and Den Networks

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

The idea behind Max Healthcare Institute and Den Networks Limited 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.