Correlation Between Macquarie Bank and AiMedia Technologies
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and AiMedia Technologies 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 Bank and AiMedia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Bank Limited and AiMedia Technologies, you can compare the effects of market volatilities on Macquarie Bank and AiMedia Technologies 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 Bank with a short position of AiMedia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and AiMedia Technologies.
Diversification Opportunities for Macquarie Bank and AiMedia Technologies
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Macquarie and AiMedia is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and AiMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AiMedia Technologies and Macquarie Bank 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 Bank Limited are associated (or correlated) with AiMedia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AiMedia Technologies has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and AiMedia Technologies go up and down completely randomly.
Pair Corralation between Macquarie Bank and AiMedia Technologies
Assuming the 90 days trading horizon Macquarie Bank is expected to generate 9.47 times less return on investment than AiMedia Technologies. But when comparing it to its historical volatility, Macquarie Bank Limited is 8.54 times less risky than AiMedia Technologies. It trades about 0.06 of its potential returns per unit of risk. AiMedia Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 34.00 in AiMedia Technologies on October 15, 2024 and sell it today you would earn a total of 50.00 from holding AiMedia Technologies or generate 147.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Bank Limited vs. AiMedia Technologies
Performance |
| Timeline |
| Macquarie Bank |
| AiMedia Technologies |
Macquarie Bank and AiMedia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and AiMedia Technologies
The main advantage of trading using opposite Macquarie Bank and AiMedia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank position performs unexpectedly, AiMedia Technologies 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 AiMedia Technologies will offset losses from the drop in AiMedia Technologies' long position.| Macquarie Bank vs. Sports Entertainment Group | Macquarie Bank vs. Queste Communications | Macquarie Bank vs. Balkan Mining and | Macquarie Bank vs. Infomedia |
| AiMedia Technologies vs. DY6 Metals | AiMedia Technologies vs. Beston Global Food | AiMedia Technologies vs. Dug Technology | AiMedia Technologies vs. Ainsworth Game Technology |
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 Stocks Directory module to find actively traded stocks across global markets.
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