Correlation Between 2S Metal and Millcon Steel
Can any of the company-specific risk be diversified away by investing in both 2S Metal and Millcon Steel 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 2S Metal and Millcon Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2S Metal Public and Millcon Steel Public, you can compare the effects of market volatilities on 2S Metal and Millcon Steel 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 2S Metal with a short position of Millcon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2S Metal and Millcon Steel.
Diversification Opportunities for 2S Metal and Millcon Steel
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 2S Metal and Millcon is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding 2S Metal Public and Millcon Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millcon Steel Public and 2S Metal 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 2S Metal Public are associated (or correlated) with Millcon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millcon Steel Public has no effect on the direction of 2S Metal i.e., 2S Metal and Millcon Steel go up and down completely randomly.
Pair Corralation between 2S Metal and Millcon Steel
Assuming the 90 days horizon 2S Metal is expected to generate 83.19 times less return on investment than Millcon Steel. But when comparing it to its historical volatility, 2S Metal Public is 41.22 times less risky than Millcon Steel. It trades about 0.02 of its potential returns per unit of risk. Millcon Steel Public is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 78.00 in Millcon Steel Public on August 30, 2024 and sell it today you would lose (68.00) from holding Millcon Steel Public or give up 87.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
2S Metal Public vs. Millcon Steel Public
Performance |
| Timeline |
| 2S Metal Public |
| Millcon Steel Public |
2S Metal and Millcon Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2S Metal and Millcon Steel
The main advantage of trading using opposite 2S Metal and Millcon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2S Metal position performs unexpectedly, Millcon Steel 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 Millcon Steel will offset losses from the drop in Millcon Steel's long position.| 2S Metal vs. MCS Steel Public | 2S Metal vs. Hwa Fong Rubber | 2S Metal vs. Haad Thip Public | 2S Metal vs. SCG PACKAGING PCL NVDR |
| Millcon Steel vs. 2S Metal Public | Millcon Steel vs. AAPICO Hitech Public | Millcon Steel vs. AJ Plast Public |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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