Correlation Between Max Healthcare and Hilton Metal

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

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

Diversification Opportunities for Max Healthcare and Hilton Metal

-0.11

Correlation Coefficient

Max Healthcare  Hilton Metal

Good diversification

The 3 months correlation between Max and Hilton is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Max Healthcare Institute and Hilton Metal Forging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Metal Forging and Max Healthcare 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 Max Healthcare Institute are associated (or correlated) with Hilton Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Metal Forging has no effect on the direction of Max Healthcare i.e., Max Healthcare and Hilton Metal go up and down completely randomly.

Pair Corralation between Max Healthcare and Hilton Metal

Assuming the 90 days trading horizon Max Healthcare Institute is expected to generate 1.01 times more return on investment than Hilton Metal. However, Max Healthcare is 1.01 times more volatile than Hilton Metal Forging. It trades about -0.03 of its potential returns per unit of risk. Hilton Metal Forging is currently generating about -0.11 per unit of risk. If you would invest  99,235  in Max Healthcare Institute on August 31, 2024 and sell it today you would lose (1,550) from holding Max Healthcare Institute or give up 1.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Max Healthcare Institute  vs.  Hilton Metal Forging

Max Healthcare Institute

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Max Healthcare Institute are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Max Healthcare may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Hilton Metal Forging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hilton Metal Forging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Max Healthcare and Hilton Metal

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

The idea behind Max Healthcare Institute and Hilton Metal Forging 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.