Correlation Between Country Group and MCS Steel
Can any of the company-specific risk be diversified away by investing in both Country Group 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 Country Group and MCS Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Country Group Holdings and MCS Steel Public, you can compare the effects of market volatilities on Country Group 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 Country Group with a short position of MCS Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Country Group and MCS Steel.
Diversification Opportunities for Country Group and MCS Steel
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Country and MCS is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Country Group Holdings 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 Country Group 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 Country Group Holdings 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 Country Group i.e., Country Group and MCS Steel go up and down completely randomly.
Pair Corralation between Country Group and MCS Steel
Assuming the 90 days trading horizon Country Group Holdings is expected to under-perform the MCS Steel. But the stock apears to be less risky and, when comparing its historical volatility, Country Group Holdings is 1.37 times less risky than MCS Steel. The stock trades about -0.17 of its potential returns per unit of risk. The MCS Steel Public is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 720.00 in MCS Steel Public on August 29, 2024 and sell it today you would lose (5.00) from holding MCS Steel Public or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Country Group Holdings vs. MCS Steel Public
Performance |
| Timeline |
| Country Group Holdings |
| MCS Steel Public |
Country Group and MCS Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Country Group and MCS Steel
The main advantage of trading using opposite Country Group and MCS Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Country Group 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.| Country Group vs. Asia Plus Group | Country Group vs. Globlex Holding Management | Country Group vs. Asia Green Energy | Country Group vs. Amanah Leasing 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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