Correlation Between Max Financial and Central Bank

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

Diversification Opportunities for Max Financial and Central Bank

-0.39

Correlation Coefficient

Max Financial  Central Bank

Very good diversification

The 3 months correlation between Max and Central is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Max Financial Services and Central Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Bank 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 Central Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Bank has no effect on the direction of Max Financial i.e., Max Financial and Central Bank go up and down completely randomly.

Pair Corralation between Max Financial and Central Bank

Assuming the 90 days trading horizon Max Financial Services is expected to under-perform the Central Bank. But the stock apears to be less risky and, when comparing its historical volatility, Max Financial Services is 1.79 times less risky than Central Bank. The stock trades about -0.11 of its potential returns per unit of risk. The Central Bank of is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,265  in Central Bank of on September 20, 2024 and sell it today you would earn a total of  237.00  from holding Central Bank of or generate 4.5% return on investment over 90 days.

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

Max Financial Services  vs.  Central Bank of

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Central Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Max Financial and Central Bank

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

The idea behind Max Financial Services and Central Bank of 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.