Correlation Between Macquarie Technology and Centaurus Metals

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

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

Diversification Opportunities for Macquarie Technology and Centaurus Metals

0.13

Correlation Coefficient

Macquarie Technology  Centaurus Metals

Average diversification

The 3 months correlation between Macquarie and Centaurus is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Centaurus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and Macquarie Technology 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 Macquarie Technology Group are associated (or correlated) with Centaurus Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaurus Metals has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Centaurus Metals go up and down completely randomly.

Pair Corralation between Macquarie Technology and Centaurus Metals

Assuming the 90 days trading horizon Macquarie Technology Group is expected to under-perform the Centaurus Metals. But the stock apears to be less risky and, when comparing its historical volatility, Macquarie Technology Group is 2.52 times less risky than Centaurus Metals. The stock trades about -0.2 of its potential returns per unit of risk. The Centaurus Metals is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Centaurus Metals on December 4, 2024 and sell it today you would lose (7.00) from holding Centaurus Metals or give up 16.67% of portfolio value over 90 days.

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

Macquarie Technology Group  vs.  Centaurus Metals

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 uncertain 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.

Centaurus Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centaurus Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary 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 Macquarie Technology and Centaurus Metals

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

The idea behind Macquarie Technology Group and Centaurus Metals 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..