Correlation Between Macquarie Technology and TPG Telecom

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

Diversification Opportunities for Macquarie Technology and TPG Telecom

-0.6

Correlation Coefficient

Macquarie Technology  TPG Telecom

Excellent diversification

The 3 months correlation between Macquarie and TPG is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and TPG Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Telecom 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 TPG Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Telecom has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and TPG Telecom go up and down completely randomly.

Pair Corralation between Macquarie Technology and TPG Telecom

Assuming the 90 days trading horizon Macquarie Technology Group is expected to under-perform the TPG Telecom. In addition to that, Macquarie Technology is 1.0 times more volatile than TPG Telecom. It trades about -0.24 of its total potential returns per unit of risk. TPG Telecom is currently generating about 0.14 per unit of volatility. If you would invest  435.00  in TPG Telecom on December 24, 2024 and sell it today you would earn a total of  59.00  from holding TPG Telecom or generate 13.56% return on investment over 90 days.

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

Macquarie Technology Group  vs.  TPG Telecom

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.

TPG Telecom

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TPG Telecom are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, TPG Telecom unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macquarie Technology and TPG Telecom

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

The idea behind Macquarie Technology Group and TPG Telecom 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.