Correlation Between Carnegie Clean and Macquarie

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

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

Diversification Opportunities for Carnegie Clean and Macquarie

0.28

Correlation Coefficient

Carnegie Clean  Macquarie

Modest diversification

The 3 months correlation between Carnegie and Macquarie is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and Macquarie Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Carnegie Clean 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 Carnegie Clean Energy are associated (or correlated) with Macquarie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and Macquarie go up and down completely randomly.

Pair Corralation between Carnegie Clean and Macquarie

Assuming the 90 days trading horizon Carnegie Clean Energy is expected to generate 2.45 times more return on investment than Macquarie. However, Carnegie Clean is 2.45 times more volatile than Macquarie Group. It trades about 0.03 of its potential returns per unit of risk. Macquarie Group is currently generating about -0.03 per unit of risk. If you would invest  3.80  in Carnegie Clean Energy on September 24, 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

Carnegie Clean Energy  vs.  Macquarie Group

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.

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.

Pair Trading with Carnegie Clean and Macquarie

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

The idea behind Carnegie Clean Energy and Macquarie Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.