Correlation Between Sukhjit Starch and Max Financial

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

By analyzing existing cross correlation between Sukhjit Starch Chemicals and Max Financial Services, you can compare the effects of market volatilities on Sukhjit Starch and Max Financial 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 Sukhjit Starch with a short position of Max Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sukhjit Starch and Max Financial.

Diversification Opportunities for Sukhjit Starch and Max Financial

-0.54

Correlation Coefficient

Sukhjit Starch  Max Financial

Excellent diversification

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

Pair Corralation between Sukhjit Starch and Max Financial

Assuming the 90 days trading horizon Sukhjit Starch Chemicals is expected to generate 5.23 times more return on investment than Max Financial. However, Sukhjit Starch is 5.23 times more volatile than Max Financial Services. It trades about 0.05 of its potential returns per unit of risk. Max Financial Services is currently generating about 0.07 per unit of risk. If you would invest  19,543  in Sukhjit Starch Chemicals on September 20, 2024 and sell it today you would earn a total of  8,732  from holding Sukhjit Starch Chemicals or generate 44.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.39%
Values	Daily Returns

Sukhjit Starch Chemicals  vs.  Max Financial Services

Sukhjit Starch Chemicals

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sukhjit Starch Chemicals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Sukhjit Starch is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Max Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Max Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Sukhjit Starch and Max Financial

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

The idea behind Sukhjit Starch Chemicals and Max Financial Services 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.