Correlation Between Macquarie Group and GUOTAI JUNAN
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and GUOTAI JUNAN 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 Group and GUOTAI JUNAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group Limited and GUOTAI JUNAN SEC, you can compare the effects of market volatilities on Macquarie Group and GUOTAI JUNAN 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 Group with a short position of GUOTAI JUNAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and GUOTAI JUNAN.
Diversification Opportunities for Macquarie Group and GUOTAI JUNAN
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Macquarie and GUOTAI is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Limited and GUOTAI JUNAN SEC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUOTAI JUNAN SEC and Macquarie Group 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 Limited are associated (or correlated) with GUOTAI JUNAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUOTAI JUNAN SEC has no effect on the direction of Macquarie Group i.e., Macquarie Group and GUOTAI JUNAN go up and down completely randomly.
Pair Corralation between Macquarie Group and GUOTAI JUNAN
Assuming the 90 days horizon Macquarie Group Limited is expected to generate 0.55 times more return on investment than GUOTAI JUNAN. However, Macquarie Group Limited is 1.81 times less risky than GUOTAI JUNAN. It trades about 0.23 of its potential returns per unit of risk. GUOTAI JUNAN SEC is currently generating about 0.08 per unit of risk. If you would invest 13,100 in Macquarie Group Limited on September 2, 2024 and sell it today you would earn a total of 964.00 from holding Macquarie Group Limited or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Group Limited vs. GUOTAI JUNAN SEC
Performance |
| Timeline |
| Macquarie Group |
| GUOTAI JUNAN SEC |
Macquarie Group and GUOTAI JUNAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Group and GUOTAI JUNAN
The main advantage of trading using opposite Macquarie Group and GUOTAI JUNAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, GUOTAI JUNAN 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 GUOTAI JUNAN will offset losses from the drop in GUOTAI JUNAN's long position.| Macquarie Group vs. Morgan Stanley | Macquarie Group vs. The Goldman Sachs | Macquarie Group vs. Superior Plus Corp | Macquarie Group vs. NMI Holdings |
| GUOTAI JUNAN vs. The Boston Beer | GUOTAI JUNAN vs. Titan Machinery | GUOTAI JUNAN vs. Australian Agricultural | GUOTAI JUNAN vs. Monster Beverage Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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