Correlation Between Macquarie and Carnegie Clean

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

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

Diversification Opportunities for Macquarie and Carnegie Clean

0.26

Correlation Coefficient

Macquarie  Carnegie Clean

Modest diversification

The 3 months correlation between Macquarie and Carnegie is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy and Macquarie 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 Group are associated (or correlated) with Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of Macquarie i.e., Macquarie and Carnegie Clean go up and down completely randomly.

Pair Corralation between Macquarie and Carnegie Clean

Assuming the 90 days trading horizon Macquarie is expected to generate 6.42 times less return on investment than Carnegie Clean. But when comparing it to its historical volatility, Macquarie Group is 2.68 times less risky than Carnegie Clean. It trades about 0.01 of its potential returns per unit of risk. Carnegie Clean Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3.80  in Carnegie Clean Energy on September 13, 2024 and sell it today you would earn a total of  0.10  from holding Carnegie Clean Energy or generate 2.63% return on investment over 90 days.

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

Macquarie Group  vs.  Carnegie Clean Energy

Macquarie Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Carnegie Clean Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carnegie Clean Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Carnegie Clean 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 and Carnegie Clean

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

The idea behind Macquarie Group and Carnegie Clean Energy 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.