Correlation Between Macquarie Technology and Centrex Metals

Can any of the company-specific risk be diversified away by investing in both Macquarie Technology and Centrex 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 Centrex 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 Centrex Metals, you can compare the effects of market volatilities on Macquarie Technology and Centrex 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 Centrex Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Technology and Centrex Metals.

Diversification Opportunities for Macquarie Technology and Centrex Metals

-0.65

Correlation Coefficient

Macquarie Technology  Centrex Metals

Excellent diversification

The 3 months correlation between Macquarie and Centrex is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Centrex Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrex 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 Centrex Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrex Metals has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Centrex Metals go up and down completely randomly.

Pair Corralation between Macquarie Technology and Centrex Metals

Assuming the 90 days trading horizon Macquarie Technology Group is expected to generate 0.36 times more return on investment than Centrex Metals. However, Macquarie Technology Group is 2.74 times less risky than Centrex Metals. It trades about 0.06 of its potential returns per unit of risk. Centrex Metals is currently generating about -0.07 per unit of risk. If you would invest  6,456  in Macquarie Technology Group on October 5, 2024 and sell it today you would earn a total of  2,373  from holding Macquarie Technology Group or generate 36.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.68%
Values	Daily Returns

Macquarie Technology Group  vs.  Centrex Metals

Macquarie Technology

Risk-Adjusted Performance

4 of 100

Insignificant

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

Centrex Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centrex 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 February 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 Centrex Metals

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

The idea behind Macquarie Technology Group and Centrex 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.