Correlation Between Max Financial and Cantabil Retail

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

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

Diversification Opportunities for Max Financial and Cantabil Retail

-0.6

Correlation Coefficient

Max Financial  Cantabil Retail

Excellent diversification

The 3 months correlation between Max and Cantabil is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Max Financial Services and Cantabil Retail India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantabil Retail India and Max Financial 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 Financial Services are associated (or correlated) with Cantabil Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantabil Retail India has no effect on the direction of Max Financial i.e., Max Financial and Cantabil Retail go up and down completely randomly.

Pair Corralation between Max Financial and Cantabil Retail

Assuming the 90 days trading horizon Max Financial is expected to generate 7.17 times less return on investment than Cantabil Retail. But when comparing it to its historical volatility, Max Financial Services is 9.88 times less risky than Cantabil Retail. It trades about 0.05 of its potential returns per unit of risk. Cantabil Retail India is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  23,937  in Cantabil Retail India on September 26, 2024 and sell it today you would earn a total of  3,218  from holding Cantabil Retail India or generate 13.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.39%
Values	Daily Returns

Max Financial Services  vs.  Cantabil Retail India

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Cantabil Retail India

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental drivers, Cantabil Retail may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Max Financial and Cantabil Retail

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

The idea behind Max Financial Services and Cantabil Retail India 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.