Correlation Between Max Financial and Automotive Stampings

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

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

Diversification Opportunities for Max Financial and Automotive Stampings

0.73

Correlation Coefficient

Max Financial  Automotive Stampings

Poor diversification

The 3 months correlation between Max and Automotive is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Max Financial Services and Automotive Stampings and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automotive Stampings and and Max Financial 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 Financial Services are associated (or correlated) with Automotive Stampings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automotive Stampings and has no effect on the direction of Max Financial i.e., Max Financial and Automotive Stampings go up and down completely randomly.

Pair Corralation between Max Financial and Automotive Stampings

Assuming the 90 days trading horizon Max Financial Services is expected to generate 0.52 times more return on investment than Automotive Stampings. However, Max Financial Services is 1.92 times less risky than Automotive Stampings. It trades about 0.09 of its potential returns per unit of risk. Automotive Stampings and is currently generating about 0.04 per unit of risk. If you would invest  82,355  in Max Financial Services on April 3, 2025 and sell it today you would earn a total of  83,035  from holding Max Financial Services or generate 100.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Max Financial Services  vs.  Automotive Stampings and

Max Financial Services

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Max Financial Services are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Max Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Automotive Stampings and

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Automotive Stampings and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Automotive Stampings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Max Financial and Automotive Stampings

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

The idea behind Max Financial Services and Automotive Stampings and 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.