Correlation Between Malaysia Steel and Mycron Steel
Can any of the company-specific risk be diversified away by investing in both Malaysia Steel and Mycron 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 Malaysia Steel and Mycron Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malaysia Steel Works and Mycron Steel Bhd, you can compare the effects of market volatilities on Malaysia Steel and Mycron 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 Malaysia Steel with a short position of Mycron Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malaysia Steel and Mycron Steel.
Diversification Opportunities for Malaysia Steel and Mycron Steel
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Malaysia and Mycron is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Malaysia Steel Works and Mycron Steel Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mycron Steel Bhd and Malaysia Steel 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 Malaysia Steel Works are associated (or correlated) with Mycron Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mycron Steel Bhd has no effect on the direction of Malaysia Steel i.e., Malaysia Steel and Mycron Steel go up and down completely randomly.
Pair Corralation between Malaysia Steel and Mycron Steel
Assuming the 90 days trading horizon Malaysia Steel Works is expected to under-perform the Mycron Steel. But the stock apears to be less risky and, when comparing its historical volatility, Malaysia Steel Works is 1.26 times less risky than Mycron Steel. The stock trades about 0.0 of its potential returns per unit of risk. The Mycron Steel Bhd is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Mycron Steel Bhd on August 28, 2024 and sell it today you would lose (3.00) from holding Mycron Steel Bhd or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malaysia Steel Works vs. Mycron Steel Bhd
Performance |
| Timeline |
| Malaysia Steel Works |
| Mycron Steel Bhd |
Malaysia Steel and Mycron Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malaysia Steel and Mycron Steel
The main advantage of trading using opposite Malaysia Steel and Mycron Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malaysia Steel position performs unexpectedly, Mycron 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 Mycron Steel will offset losses from the drop in Mycron Steel's long position.| Malaysia Steel vs. Mercury Industries Bhd | Malaysia Steel vs. PMB Technology Bhd | Malaysia Steel vs. Mycron Steel Bhd | Malaysia Steel vs. Choo Bee Metal |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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