Correlation Between IDBI Bank and Max Financial

Can any of the company-specific risk be diversified away by investing in both IDBI 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 IDBI 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 IDBI Bank Limited and Max Financial Services, you can compare the effects of market volatilities on IDBI 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 IDBI Bank with a short position of Max Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDBI Bank and Max Financial.

Diversification Opportunities for IDBI Bank and Max Financial

0.87

Correlation Coefficient

IDBI Bank  Max Financial

Very poor diversification

The 3 months correlation between IDBI and Max is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding IDBI Bank Limited 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 IDBI 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 IDBI Bank Limited 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 IDBI Bank i.e., IDBI Bank and Max Financial go up and down completely randomly.

Pair Corralation between IDBI Bank and Max Financial

Assuming the 90 days trading horizon IDBI Bank is expected to generate 1.07 times less return on investment than Max Financial. In addition to that, IDBI Bank is 1.85 times more volatile than Max Financial Services. It trades about 0.14 of its total potential returns per unit of risk. Max Financial Services is currently generating about 0.28 per unit of volatility. If you would invest  123,740  in Max Financial Services on April 20, 2025 and sell it today you would earn a total of  30,170  from holding Max Financial Services or generate 24.38% return on investment over 90 days.

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

IDBI Bank Limited  vs.  Max Financial Services

IDBI Bank Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IDBI Bank Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, IDBI Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Max Financial Services

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Max Financial Services are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Max Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IDBI Bank and Max Financial

The main advantage of trading using opposite IDBI Bank and Max Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDBI 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 IDBI Bank Limited 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.