Correlation Between Macquarie Technology and Nova Eye

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

Diversification Opportunities for Macquarie Technology and Nova Eye

-0.35

Correlation Coefficient

Macquarie Technology  Nova Eye

Very good diversification

The 3 months correlation between Macquarie and Nova is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Nova Eye Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Eye Medical 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 Nova Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Eye Medical has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Nova Eye go up and down completely randomly.

Pair Corralation between Macquarie Technology and Nova Eye

Assuming the 90 days trading horizon Macquarie Technology Group is expected to under-perform the Nova Eye. But the stock apears to be less risky and, when comparing its historical volatility, Macquarie Technology Group is 3.37 times less risky than Nova Eye. The stock trades about -0.02 of its potential returns per unit of risk. The Nova Eye Medical is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Nova Eye Medical on October 25, 2024 and sell it today you would earn a total of  2.00  from holding Nova Eye Medical or generate 13.33% return on investment over 90 days.

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

Macquarie Technology Group  vs.  Nova Eye Medical

Macquarie Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Technology Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Macquarie Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nova Eye Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova Eye Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Nova Eye is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Macquarie Technology and Nova Eye

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

The idea behind Macquarie Technology Group and Nova Eye Medical 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.