Correlation Between Max Financial and V-Mart Retail

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

Diversification Opportunities for Max Financial and V-Mart Retail

0.54

Correlation Coefficient

Max Financial  V-Mart Retail

Very weak diversification

The 3 months correlation between Max and V-Mart is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Max Financial Services and V Mart Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Mart Retail 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 V-Mart Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Mart Retail has no effect on the direction of Max Financial i.e., Max Financial and V-Mart Retail go up and down completely randomly.

Pair Corralation between Max Financial and V-Mart Retail

Assuming the 90 days trading horizon Max Financial Services is expected to generate 0.72 times more return on investment than V-Mart Retail. However, Max Financial Services is 1.38 times less risky than V-Mart Retail. It trades about 0.02 of its potential returns per unit of risk. V Mart Retail Limited is currently generating about -0.17 per unit of risk. If you would invest  110,610  in Max Financial Services on December 27, 2024 and sell it today you would earn a total of  1,150  from holding Max Financial Services or generate 1.04% return on investment over 90 days.

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

Max Financial Services  vs.  V Mart Retail Limited

Max Financial Services

Risk-Adjusted Performance

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

V Mart Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days V Mart Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Max Financial and V-Mart Retail

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

The idea behind Max Financial Services and V Mart 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.