Correlation Between Max Financial and Lakshmi Finance

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

Diversification Opportunities for Max Financial and Lakshmi Finance

-0.04

Correlation Coefficient

Max Financial  Lakshmi Finance

Good diversification

The 3 months correlation between Max and Lakshmi is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Max Financial Services and Lakshmi Finance Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakshmi Finance Indu 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 Lakshmi Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakshmi Finance Indu has no effect on the direction of Max Financial i.e., Max Financial and Lakshmi Finance go up and down completely randomly.

Pair Corralation between Max Financial and Lakshmi Finance

Assuming the 90 days trading horizon Max Financial is expected to generate 1.52 times less return on investment than Lakshmi Finance. But when comparing it to its historical volatility, Max Financial Services is 2.32 times less risky than Lakshmi Finance. It trades about 0.02 of its potential returns per unit of risk. Lakshmi Finance Industrial is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  24,147  in Lakshmi Finance Industrial on September 12, 2024 and sell it today you would lose (447.00) from holding Lakshmi Finance Industrial or give up 1.85% of portfolio value over 90 days.

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

Max Financial Services  vs.  Lakshmi Finance Industrial

Max Financial Services

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Max Financial Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Max Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Lakshmi Finance Indu

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lakshmi Finance Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Lakshmi Finance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Max Financial and Lakshmi Finance

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

The idea behind Max Financial Services and Lakshmi Finance Industrial 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.