Correlation Between Maxim Power and Synex International

Can any of the company-specific risk be diversified away by investing in both Maxim Power and Synex International 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 Maxim Power and Synex International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Maxim Power Corp and Synex International, you can compare the effects of market volatilities on Maxim Power and Synex International 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 Maxim Power with a short position of Synex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maxim Power and Synex International.

Diversification Opportunities for Maxim Power and Synex International

-0.2

Correlation Coefficient

Maxim Power  Synex International

Good diversification

The 3 months correlation between Maxim and Synex is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Maxim Power Corp and Synex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synex International and Maxim Power 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 Maxim Power Corp are associated (or correlated) with Synex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synex International has no effect on the direction of Maxim Power i.e., Maxim Power and Synex International go up and down completely randomly.

Pair Corralation between Maxim Power and Synex International

Assuming the 90 days trading horizon Maxim Power Corp is expected to under-perform the Synex International. But the stock apears to be less risky and, when comparing its historical volatility, Maxim Power Corp is 1.42 times less risky than Synex International. The stock trades about -0.34 of its potential returns per unit of risk. The Synex International is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  166.00  in Synex International on November 29, 2024 and sell it today you would lose (12.00) from holding Synex International or give up 7.23% of portfolio value over 90 days.

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

Maxim Power Corp  vs.  Synex International

Maxim Power Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Maxim Power Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Maxim Power is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Synex International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Synex International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Maxim Power and Synex International

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

The idea behind Maxim Power Corp and Synex International 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.