Correlation Between ESGL Holdings and Maximus

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

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

Diversification Opportunities for ESGL Holdings and Maximus

-0.33

Correlation Coefficient

ESGL Holdings  Maximus

Very good diversification

The 3 months correlation between ESGL and Maximus is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding ESGL Holdings Limited and Maximus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maximus and ESGL Holdings 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 ESGL Holdings 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 ESGL Holdings i.e., ESGL Holdings and Maximus go up and down completely randomly.

Pair Corralation between ESGL Holdings and Maximus

Given the investment horizon of 90 days ESGL Holdings Limited is expected to generate 3.89 times more return on investment than Maximus. However, ESGL Holdings is 3.89 times more volatile than Maximus. It trades about 0.17 of its potential returns per unit of risk. Maximus is currently generating about -0.09 per unit of risk. If you would invest  105.00  in ESGL Holdings Limited on February 3, 2025 and sell it today you would earn a total of  96.00  from holding ESGL Holdings Limited or generate 91.43% return on investment over 90 days.

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

ESGL Holdings Limited  vs.  Maximus

ESGL Holdings Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ESGL Holdings Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, ESGL Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Maximus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maximus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ESGL Holdings and Maximus

The main advantage of trading using opposite ESGL Holdings and Maximus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESGL Holdings 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 ESGL Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.