Correlation Between Max Healthcare and JGCHEMICALS

Can any of the company-specific risk be diversified away by investing in both Max Healthcare and JGCHEMICALS 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 JGCHEMICALS 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 JGCHEMICALS LIMITED, you can compare the effects of market volatilities on Max Healthcare and JGCHEMICALS 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 JGCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Max Healthcare and JGCHEMICALS.

Diversification Opportunities for Max Healthcare and JGCHEMICALS

0.74

Correlation Coefficient

Max Healthcare  JGCHEMICALS

Poor diversification

The 3 months correlation between Max and JGCHEMICALS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Max Healthcare Institute and JGCHEMICALS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JGCHEMICALS 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 JGCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JGCHEMICALS LIMITED has no effect on the direction of Max Healthcare i.e., Max Healthcare and JGCHEMICALS go up and down completely randomly.

Pair Corralation between Max Healthcare and JGCHEMICALS

Assuming the 90 days trading horizon Max Healthcare Institute is expected to generate 0.92 times more return on investment than JGCHEMICALS. However, Max Healthcare Institute is 1.09 times less risky than JGCHEMICALS. It trades about 0.0 of its potential returns per unit of risk. JGCHEMICALS LIMITED is currently generating about -0.12 per unit of risk. If you would invest  116,210  in Max Healthcare Institute on December 28, 2024 and sell it today you would lose (3,270) from holding Max Healthcare Institute or give up 2.81% 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.  JGCHEMICALS LIMITED

Max Healthcare Institute

Risk-Adjusted Performance

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 newest stock price mess, may contribute to short-term losses for the institutional investors.

JGCHEMICALS LIMITED

Risk-Adjusted Performance

Very Weak

Over the last 90 days JGCHEMICALS LIMITED 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 technical indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Max Healthcare and JGCHEMICALS

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

The idea behind Max Healthcare Institute and JGCHEMICALS 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.