Correlation Between Oil Natural and Max Healthcare

Can any of the company-specific risk be diversified away by investing in both Oil Natural and Max Healthcare 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 Oil Natural and Max Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oil Natural Gas and Max Healthcare Institute, you can compare the effects of market volatilities on Oil Natural and Max Healthcare 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 Oil Natural with a short position of Max Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Natural and Max Healthcare.

Diversification Opportunities for Oil Natural and Max Healthcare

-0.44

Correlation Coefficient

Oil Natural  Max Healthcare

Very good diversification

The 3 months correlation between Oil and Max is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Oil Natural Gas and Max Healthcare Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Healthcare Institute and Oil Natural 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 Oil Natural Gas are associated (or correlated) with Max Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Healthcare Institute has no effect on the direction of Oil Natural i.e., Oil Natural and Max Healthcare go up and down completely randomly.

Pair Corralation between Oil Natural and Max Healthcare

Assuming the 90 days trading horizon Oil Natural Gas is expected to under-perform the Max Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Oil Natural Gas is 1.62 times less risky than Max Healthcare. The stock trades about -0.11 of its potential returns per unit of risk. The Max Healthcare Institute is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  90,800  in Max Healthcare Institute on September 13, 2024 and sell it today you would earn a total of  22,420  from holding Max Healthcare Institute or generate 24.69% return on investment over 90 days.

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

Oil Natural Gas  vs.  Max Healthcare Institute

Oil Natural Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oil Natural Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal 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.

Max Healthcare Institute

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Max Healthcare Institute are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, Max Healthcare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oil Natural and Max Healthcare

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

The idea behind Oil Natural Gas and Max Healthcare Institute 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.