Correlation Between SMX Public and Maximus

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

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

Diversification Opportunities for SMX Public and Maximus

-0.26

Correlation Coefficient

SMX Public  Maximus

Very good diversification

The 3 months correlation between SMX and Maximus is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and Maximus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maximus and SMX Public 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 SMX Public Limited are associated (or correlated) with Maximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maximus has no effect on the direction of SMX Public i.e., SMX Public and Maximus go up and down completely randomly.

Pair Corralation between SMX Public and Maximus

Assuming the 90 days horizon SMX Public Limited is expected to generate 28.52 times more return on investment than Maximus. However, SMX Public is 28.52 times more volatile than Maximus. It trades about 0.26 of its potential returns per unit of risk. Maximus is currently generating about 0.11 per unit of risk. If you would invest  0.58  in SMX Public Limited on March 10, 2024 and sell it today you would earn a total of  0.42  from holding SMX Public Limited or generate 72.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	57.14%
Values	Daily Returns

SMX Public Limited  vs.  Maximus

SMX Public Limited

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SMX Public Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, SMX Public showed solid returns over the last few months and may actually be approaching a breakup point.

Maximus

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Maximus are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Maximus is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SMX Public and Maximus

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

The idea behind SMX Public Limited and Maximus 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 Stocks Directory module to find actively traded stocks across global markets.