Correlation Between Macquarie Technology and Hammer Metals

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

Diversification Opportunities for Macquarie Technology and Hammer Metals

0.05

Correlation Coefficient

Macquarie Technology  Hammer Metals

Significant diversification

The 3 months correlation between Macquarie and Hammer is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Hammer Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammer Metals 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 Hammer Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammer Metals has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Hammer Metals go up and down completely randomly.

Pair Corralation between Macquarie Technology and Hammer Metals

Assuming the 90 days trading horizon Macquarie Technology is expected to generate 1.35 times less return on investment than Hammer Metals. But when comparing it to its historical volatility, Macquarie Technology Group is 2.85 times less risky than Hammer Metals. It trades about 0.02 of its potential returns per unit of risk. Hammer Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4.50  in Hammer Metals on April 25, 2025 and sell it today you would lose (1.50) from holding Hammer Metals or give up 33.33% of portfolio value over 90 days.

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

Macquarie Technology Group  vs.  Hammer Metals

Macquarie Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Technology Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Macquarie Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hammer Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hammer Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hammer Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macquarie Technology and Hammer Metals

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

The idea behind Macquarie Technology Group and Hammer Metals 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.