Correlation Between Macauto Industrial and Information Technology

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

By analyzing existing cross correlation between Macauto Industrial Co and Information Technology Total, you can compare the effects of market volatilities on Macauto Industrial and Information Technology 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 Macauto Industrial with a short position of Information Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macauto Industrial and Information Technology.

Diversification Opportunities for Macauto Industrial and Information Technology

-0.24

Correlation Coefficient

Macauto Industrial  Information Technology

Very good diversification

The 3 months correlation between Macauto and Information is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Macauto Industrial Co and Information Technology Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Technology and Macauto Industrial 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 Macauto Industrial Co are associated (or correlated) with Information Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Technology has no effect on the direction of Macauto Industrial i.e., Macauto Industrial and Information Technology go up and down completely randomly.

Pair Corralation between Macauto Industrial and Information Technology

Assuming the 90 days trading horizon Macauto Industrial Co is expected to under-perform the Information Technology. In addition to that, Macauto Industrial is 1.3 times more volatile than Information Technology Total. It trades about -0.31 of its total potential returns per unit of risk. Information Technology Total is currently generating about -0.39 per unit of volatility. If you would invest  4,885  in Information Technology Total on October 6, 2024 and sell it today you would lose (445.00) from holding Information Technology Total or give up 9.11% of portfolio value over 90 days.

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

Macauto Industrial Co  vs.  Information Technology Total

Macauto Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macauto Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Information Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Information Technology Total are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Information Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Macauto Industrial and Information Technology

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

The idea behind Macauto Industrial Co and Information Technology Total 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.