Correlation Between Max Healthcare and Spandana Sphoorty

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

Diversification Opportunities for Max Healthcare and Spandana Sphoorty

-0.42

Correlation Coefficient

Max Healthcare  Spandana Sphoorty

Very good diversification

The 3 months correlation between Max and Spandana is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Max Healthcare Institute and Spandana Sphoorty Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spandana Sphoorty 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 Spandana Sphoorty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spandana Sphoorty has no effect on the direction of Max Healthcare i.e., Max Healthcare and Spandana Sphoorty go up and down completely randomly.

Pair Corralation between Max Healthcare and Spandana Sphoorty

Assuming the 90 days trading horizon Max Healthcare Institute is expected to generate 0.8 times more return on investment than Spandana Sphoorty. However, Max Healthcare Institute is 1.25 times less risky than Spandana Sphoorty. It trades about 0.09 of its potential returns per unit of risk. Spandana Sphoorty Financial is currently generating about -0.02 per unit of risk. If you would invest  43,876  in Max Healthcare Institute on October 27, 2024 and sell it today you would earn a total of  61,699  from holding Max Healthcare Institute or generate 140.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

Max Healthcare Institute  vs.  Spandana Sphoorty Financial

Max Healthcare Institute

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Max Healthcare Institute are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Max Healthcare may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Spandana Sphoorty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spandana Sphoorty Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Max Healthcare and Spandana Sphoorty

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

The idea behind Max Healthcare Institute and Spandana Sphoorty Financial 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.