Correlation Between Central Bank and Max Financial

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

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

Diversification Opportunities for Central Bank and Max Financial

-0.39

Correlation Coefficient

Central Bank  Max Financial

Very good diversification

The 3 months correlation between Central and Max is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Central Bank of 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 Central Bank 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 Central Bank of 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 Central Bank i.e., Central Bank and Max Financial go up and down completely randomly.

Pair Corralation between Central Bank and Max Financial

Assuming the 90 days trading horizon Central Bank is expected to generate 1.06 times less return on investment than Max Financial. In addition to that, Central Bank is 1.61 times more volatile than Max Financial Services. It trades about 0.03 of its total potential returns per unit of risk. Max Financial Services is currently generating about 0.05 per unit of volatility. If you would invest  93,015  in Max Financial Services on September 20, 2024 and sell it today you would earn a total of  21,225  from holding Max Financial Services or generate 22.82% return on investment over 90 days.

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

Central Bank of  vs.  Max Financial Services

Central Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Central Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional 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 Central Bank and Max Financial

The main advantage of trading using opposite Central Bank and Max Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Bank 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 Central Bank of 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..