Correlation Between Maxim Power and Cascades

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

By analyzing existing cross correlation between Maxim Power Corp and Cascades, you can compare the effects of market volatilities on Maxim Power and Cascades 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 Maxim Power with a short position of Cascades. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maxim Power and Cascades.

Diversification Opportunities for Maxim Power and Cascades

0.51

Correlation Coefficient

Maxim Power  Cascades

Very weak diversification

The 3 months correlation between Maxim and Cascades is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Maxim Power Corp and Cascades in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cascades and Maxim Power 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 Maxim Power Corp are associated (or correlated) with Cascades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cascades has no effect on the direction of Maxim Power i.e., Maxim Power and Cascades go up and down completely randomly.

Pair Corralation between Maxim Power and Cascades

Assuming the 90 days trading horizon Maxim Power Corp is expected to generate 1.65 times more return on investment than Cascades. However, Maxim Power is 1.65 times more volatile than Cascades. It trades about 0.15 of its potential returns per unit of risk. Cascades is currently generating about 0.07 per unit of risk. If you would invest  377.00  in Maxim Power Corp on April 24, 2025 and sell it today you would earn a total of  77.00  from holding Maxim Power Corp or generate 20.42% return on investment over 90 days.

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

Maxim Power Corp  vs.  Cascades

Maxim Power Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maxim Power Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Maxim Power displayed solid returns over the last few months and may actually be approaching a breakup point.

Cascades

Risk-Adjusted Performance

Modest

Over the last 90 days Cascades has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cascades is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Maxim Power and Cascades

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

The idea behind Maxim Power Corp and Cascades 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.