Correlation Between Austral Gold and MACYS

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

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

Diversification Opportunities for Austral Gold and MACYS

0.19

Correlation Coefficient

Austral Gold  MACYS

Average diversification

The 3 months correlation between Austral and MACYS is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Austral Gold Limited and MACYS RETAIL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACYS RETAIL HLDGS and Austral Gold 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 Austral Gold Limited are associated (or correlated) with MACYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACYS RETAIL HLDGS has no effect on the direction of Austral Gold i.e., Austral Gold and MACYS go up and down completely randomly.

Pair Corralation between Austral Gold and MACYS

Assuming the 90 days horizon Austral Gold Limited is expected to generate 32.75 times more return on investment than MACYS. However, Austral Gold is 32.75 times more volatile than MACYS RETAIL HLDGS. It trades about 0.12 of its potential returns per unit of risk. MACYS RETAIL HLDGS is currently generating about -0.23 per unit of risk. If you would invest  1.10  in Austral Gold Limited on October 12, 2024 and sell it today you would earn a total of  0.04  from holding Austral Gold Limited or generate 3.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	77.27%
Values	Daily Returns

Austral Gold Limited  vs.  MACYS RETAIL HLDGS

Austral Gold Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Austral Gold Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Austral Gold reported solid returns over the last few months and may actually be approaching a breakup point.

MACYS RETAIL HLDGS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MACYS RETAIL HLDGS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MACYS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Austral Gold and MACYS

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

The idea behind Austral Gold Limited and MACYS RETAIL HLDGS 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.