Correlation Between Max Financial and Star Health

Can any of the company-specific risk be diversified away by investing in both Max Financial and Star Health 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 Star Health 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 Star Health and, you can compare the effects of market volatilities on Max Financial and Star Health 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 Star Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Max Financial and Star Health.

Diversification Opportunities for Max Financial and Star Health

0.6

Correlation Coefficient

Max Financial  Star Health

Poor diversification

The 3 months correlation between Max and Star is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Max Financial Services and Star Health and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Health 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 Star Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Health has no effect on the direction of Max Financial i.e., Max Financial and Star Health go up and down completely randomly.

Pair Corralation between Max Financial and Star Health

Assuming the 90 days trading horizon Max Financial Services is expected to generate 0.64 times more return on investment than Star Health. However, Max Financial Services is 1.57 times less risky than Star Health. It trades about 0.28 of its potential returns per unit of risk. Star Health and is currently generating about 0.08 per unit of risk. If you would invest  123,740  in Max Financial Services on April 21, 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	Significant
Accuracy	100.0%
Values	Daily Returns

Max Financial Services  vs.  Star Health and

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 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Max Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Star Health

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Star Health and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Star Health may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Max Financial and Star Health

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

The idea behind Max Financial Services and Star Health 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.