Correlation Between Senvest Capital and Maxim Power

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

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

Diversification Opportunities for Senvest Capital and Maxim Power

0.01

Correlation Coefficient

Senvest Capital  Maxim Power

Significant diversification

The 3 months correlation between Senvest and Maxim is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Senvest Capital 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 Senvest Capital 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 Senvest Capital 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 Senvest Capital i.e., Senvest Capital and Maxim Power go up and down completely randomly.

Pair Corralation between Senvest Capital and Maxim Power

Assuming the 90 days trading horizon Senvest Capital is expected to generate 0.38 times more return on investment than Maxim Power. However, Senvest Capital is 2.64 times less risky than Maxim Power. It trades about 0.04 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  38,000  in Senvest Capital on December 30, 2024 and sell it today you would earn a total of  819.00  from holding Senvest Capital or generate 2.16% return on investment over 90 days.

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

Senvest Capital  vs.  Maxim Power Corp

Senvest Capital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Senvest Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Senvest Capital is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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 Senvest Capital and Maxim Power

The main advantage of trading using opposite Senvest Capital and Maxim Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senvest Capital 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 Senvest Capital 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.