Correlation Between MCS Steel and CK Power
Can any of the company-specific risk be diversified away by investing in both MCS Steel and CK Power 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 MCS Steel and CK Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MCS Steel Public and CK Power Public, you can compare the effects of market volatilities on MCS Steel and CK Power 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 MCS Steel with a short position of CK Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCS Steel and CK Power.
Diversification Opportunities for MCS Steel and CK Power
Significant diversification
The 3 months correlation between MCS and CKP is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding MCS Steel Public and CK Power Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Power Public and MCS 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 MCS Steel Public are associated (or correlated) with CK Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Power Public has no effect on the direction of MCS Steel i.e., MCS Steel and CK Power go up and down completely randomly.
Pair Corralation between MCS Steel and CK Power
Assuming the 90 days trading horizon MCS Steel Public is expected to generate 0.88 times more return on investment than CK Power. However, MCS Steel Public is 1.14 times less risky than CK Power. It trades about -0.12 of its potential returns per unit of risk. CK Power Public is currently generating about -0.28 per unit of risk. If you would invest 740.00 in MCS Steel Public on September 1, 2024 and sell it today you would lose (30.00) from holding MCS Steel Public or give up 4.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCS Steel Public vs. CK Power Public
Performance |
| Timeline |
| MCS Steel Public |
| CK Power Public |
MCS Steel and CK Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCS Steel and CK Power
The main advantage of trading using opposite MCS Steel and CK Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCS Steel position performs unexpectedly, CK Power 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 CK Power will offset losses from the drop in CK Power's long position.| MCS Steel vs. AAPICO Hitech Public | MCS Steel vs. AP Public | MCS Steel vs. Aikchol Hospital Public | MCS Steel vs. Bank of Ayudhya |
| CK Power vs. Energy Absolute Public | CK Power vs. BCPG Public | CK Power vs. Bangkok Expressway and | CK Power vs. Gulf Energy Development |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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