Correlation Between Royal Helium and Maxim Power

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

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

Diversification Opportunities for Royal Helium and Maxim Power

-0.53

Correlation Coefficient

Royal Helium  Maxim Power

Excellent diversification

The 3 months correlation between Royal and Maxim is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Royal Helium and Maxim Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxim Power Corp and Royal Helium 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 Royal Helium are associated (or correlated) with Maxim Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxim Power Corp has no effect on the direction of Royal Helium i.e., Royal Helium and Maxim Power go up and down completely randomly.

Pair Corralation between Royal Helium and Maxim Power

Assuming the 90 days horizon Royal Helium is expected to generate 110.47 times more return on investment than Maxim Power. However, Royal Helium is 110.47 times more volatile than Maxim Power Corp. It trades about 0.26 of its potential returns per unit of risk. Maxim Power Corp is currently generating about -0.19 per unit of risk. If you would invest  2.50  in Royal Helium on December 29, 2024 and sell it today you would earn a total of  3,458  from holding Royal Helium or generate 138300.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Royal Helium  vs.  Maxim Power Corp

Royal Helium

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Helium are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Royal Helium showed solid returns over the last few months and may actually be approaching a breakup point.

Maxim Power Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maxim Power Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental 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 Royal Helium and Maxim Power

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

The idea behind Royal Helium and Maxim Power Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.