Correlation Between Charter Hall and Macquarie Technology

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

By analyzing existing cross correlation between Charter Hall Education and Macquarie Technology Group, you can compare the effects of market volatilities on Charter Hall and Macquarie 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 Charter Hall with a short position of Macquarie Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Macquarie Technology.

Diversification Opportunities for Charter Hall and Macquarie Technology

-0.62

Correlation Coefficient

Charter Hall  Macquarie Technology

Excellent diversification

The 3 months correlation between Charter and Macquarie is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Education and Macquarie Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Technology and Charter Hall 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 Charter Hall Education are associated (or correlated) with Macquarie Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Technology has no effect on the direction of Charter Hall i.e., Charter Hall and Macquarie Technology go up and down completely randomly.

Pair Corralation between Charter Hall and Macquarie Technology

Assuming the 90 days trading horizon Charter Hall Education is expected to generate 1.05 times more return on investment than Macquarie Technology. However, Charter Hall is 1.05 times more volatile than Macquarie Technology Group. It trades about 0.05 of its potential returns per unit of risk. Macquarie Technology Group is currently generating about -0.23 per unit of risk. If you would invest  258.00  in Charter Hall Education on December 22, 2024 and sell it today you would earn a total of  12.00  from holding Charter Hall Education or generate 4.65% return on investment over 90 days.

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

Charter Hall Education  vs.  Macquarie Technology Group

Charter Hall Education

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Hall Education are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Charter Hall is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Macquarie Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Macquarie Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Charter Hall and Macquarie Technology

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

The idea behind Charter Hall Education and Macquarie Technology Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.