Correlation Between Asia Aviation and MCS Steel
Can any of the company-specific risk be diversified away by investing in both Asia Aviation and MCS 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 Asia Aviation and MCS Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Aviation Public and MCS Steel Public, you can compare the effects of market volatilities on Asia Aviation and MCS 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 Asia Aviation with a short position of MCS Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Aviation and MCS Steel.
Diversification Opportunities for Asia Aviation and MCS Steel
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Asia and MCS is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Asia Aviation Public and MCS Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCS Steel Public and Asia Aviation 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 Asia Aviation Public are associated (or correlated) with MCS Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCS Steel Public has no effect on the direction of Asia Aviation i.e., Asia Aviation and MCS Steel go up and down completely randomly.
Pair Corralation between Asia Aviation and MCS Steel
Assuming the 90 days trading horizon Asia Aviation Public is expected to generate 1.0 times more return on investment than MCS Steel. However, Asia Aviation Public is 1.0 times less risky than MCS Steel. It trades about 0.08 of its potential returns per unit of risk. MCS Steel Public is currently generating about 0.08 per unit of risk. If you would invest 222.00 in Asia Aviation Public on September 1, 2024 and sell it today you would earn a total of 60.00 from holding Asia Aviation Public or generate 27.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Aviation Public vs. MCS Steel Public
Performance |
| Timeline |
| Asia Aviation Public |
| MCS Steel Public |
Asia Aviation and MCS Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Aviation and MCS Steel
The main advantage of trading using opposite Asia Aviation and MCS Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Aviation position performs unexpectedly, MCS 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 MCS Steel will offset losses from the drop in MCS Steel's long position.| Asia Aviation vs. Airports of Thailand | Asia Aviation vs. Bangkok Expressway and | Asia Aviation vs. BTS Group Holdings | Asia Aviation vs. Bangkok Airways Public |
| MCS Steel vs. AAPICO Hitech Public | MCS Steel vs. AP Public | MCS Steel vs. Aikchol Hospital Public | MCS Steel vs. Bank of Ayudhya |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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