Correlation Between Macquarie Technology and Itech Minerals

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

Diversification Opportunities for Macquarie Technology and Itech Minerals

-0.39

Correlation Coefficient

Macquarie Technology  Itech Minerals

Very good diversification

The 3 months correlation between Macquarie and Itech is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Itech Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itech Minerals 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 Itech Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itech Minerals has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Itech Minerals go up and down completely randomly.

Pair Corralation between Macquarie Technology and Itech Minerals

Assuming the 90 days trading horizon Macquarie Technology Group is expected to generate 0.32 times more return on investment than Itech Minerals. However, Macquarie Technology Group is 3.15 times less risky than Itech Minerals. It trades about -0.12 of its potential returns per unit of risk. Itech Minerals is currently generating about -0.23 per unit of risk. If you would invest  8,972  in Macquarie Technology Group on September 15, 2024 and sell it today you would lose (308.00) from holding Macquarie Technology Group or give up 3.43% of portfolio value over 90 days.

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

Macquarie Technology Group  vs.  Itech Minerals

Macquarie Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Technology Group are ranked lower than 7 (%) 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 January 2025.

Itech Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itech Minerals 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 January 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 Itech Minerals

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

The idea behind Macquarie Technology Group and Itech Minerals 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.