Correlation Between Max Financial and V2 Retail

Can any of the company-specific risk be diversified away by investing in both Max Financial and V2 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 V2 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 V2 Retail Limited, you can compare the effects of market volatilities on Max Financial and V2 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 V2 Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Max Financial and V2 Retail.

Diversification Opportunities for Max Financial and V2 Retail

-0.25

Correlation Coefficient

Max Financial  V2 Retail

Very good diversification

The 3 months correlation between Max and V2RETAIL is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Max Financial Services and V2 Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V2 Retail Limited 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 V2 Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V2 Retail Limited has no effect on the direction of Max Financial i.e., Max Financial and V2 Retail go up and down completely randomly.

Pair Corralation between Max Financial and V2 Retail

Assuming the 90 days trading horizon Max Financial is expected to generate 43.28 times less return on investment than V2 Retail. But when comparing it to its historical volatility, Max Financial Services is 1.49 times less risky than V2 Retail. It trades about 0.0 of its potential returns per unit of risk. V2 Retail Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  113,090  in V2 Retail Limited on September 14, 2024 and sell it today you would earn a total of  26,180  from holding V2 Retail Limited or generate 23.15% 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.  V2 Retail Limited

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.

V2 Retail Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in V2 Retail Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, V2 Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Max Financial and V2 Retail

The main advantage of trading using opposite Max Financial and V2 Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Max Financial position performs unexpectedly, V2 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 V2 Retail will offset losses from the drop in V2 Retail's long position.

The idea behind Max Financial Services and V2 Retail 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.