Correlation Between MCS Steel and LPN Development
Can any of the company-specific risk be diversified away by investing in both MCS Steel and LPN Development 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 LPN Development 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 LPN Development Public, you can compare the effects of market volatilities on MCS Steel and LPN Development 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 LPN Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCS Steel and LPN Development.
Diversification Opportunities for MCS Steel and LPN Development
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MCS and LPN is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding MCS Steel Public and LPN Development Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPN Development 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 LPN Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPN Development Public has no effect on the direction of MCS Steel i.e., MCS Steel and LPN Development go up and down completely randomly.
Pair Corralation between MCS Steel and LPN Development
Assuming the 90 days trading horizon MCS Steel Public is expected to generate 1.63 times more return on investment than LPN Development. However, MCS Steel is 1.63 times more volatile than LPN Development Public. It trades about -0.01 of its potential returns per unit of risk. LPN Development Public is currently generating about -0.35 per unit of risk. If you would invest 720.00 in MCS Steel Public on August 30, 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCS Steel Public vs. LPN Development Public
Performance |
| Timeline |
| MCS Steel Public |
| LPN Development Public |
MCS Steel and LPN Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCS Steel and LPN Development
The main advantage of trading using opposite MCS Steel and LPN Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCS Steel position performs unexpectedly, LPN Development 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 LPN Development will offset losses from the drop in LPN Development's long position.| MCS Steel vs. Lalin Property Public | MCS Steel vs. Land and Houses | MCS Steel vs. Banpu Public | MCS Steel vs. TISCO Financial Group |
| LPN Development vs. Land and Houses | LPN Development vs. AP Public | LPN Development vs. Quality Houses Public | LPN Development vs. Siri Prime Office |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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