Correlation Between Max Financial and Delta Manufacturing

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

Diversification Opportunities for Max Financial and Delta Manufacturing

0.75

Correlation Coefficient

Max Financial  Delta Manufacturing

Poor diversification

The 3 months correlation between Max and Delta is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Max Financial Services and Delta Manufacturing Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Manufacturing 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 Delta Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Manufacturing has no effect on the direction of Max Financial i.e., Max Financial and Delta Manufacturing go up and down completely randomly.

Pair Corralation between Max Financial and Delta Manufacturing

Assuming the 90 days trading horizon Max Financial Services is expected to generate 0.42 times more return on investment than Delta Manufacturing. However, Max Financial Services is 2.4 times less risky than Delta Manufacturing. It trades about -0.1 of its potential returns per unit of risk. Delta Manufacturing Limited is currently generating about -0.23 per unit of risk. If you would invest  111,465  in Max Financial Services on December 2, 2024 and sell it today you would lose (11,655) from holding Max Financial Services or give up 10.46% of portfolio value over 90 days.

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

Max Financial Services  vs.  Delta Manufacturing Limited

Max Financial Services

Risk-Adjusted Performance

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 weak 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.

Delta Manufacturing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Manufacturing Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental 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 Financial and Delta Manufacturing

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

The idea behind Max Financial Services and Delta Manufacturing 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.