Correlation Between MCS Steel and Multibax Public
Can any of the company-specific risk be diversified away by investing in both MCS Steel and Multibax Public 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 Multibax Public 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 Multibax Public, you can compare the effects of market volatilities on MCS Steel and Multibax Public 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 Multibax Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCS Steel and Multibax Public.
Diversification Opportunities for MCS Steel and Multibax Public
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MCS and Multibax is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding MCS Steel Public and Multibax Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multibax 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 Multibax Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multibax Public has no effect on the direction of MCS Steel i.e., MCS Steel and Multibax Public go up and down completely randomly.
Pair Corralation between MCS Steel and Multibax Public
Assuming the 90 days trading horizon MCS Steel Public is expected to generate 1.0 times more return on investment than Multibax Public. However, MCS Steel Public is 1.0 times less risky than Multibax Public. It trades about 0.04 of its potential returns per unit of risk. Multibax Public is currently generating about 0.04 per unit of risk. If you would invest 808.00 in MCS Steel Public on September 5, 2024 and sell it today you would lose (108.00) from holding MCS Steel Public or give up 13.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCS Steel Public vs. Multibax Public
Performance |
| Timeline |
| MCS Steel Public |
| Multibax Public |
MCS Steel and Multibax Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCS Steel and Multibax Public
The main advantage of trading using opposite MCS Steel and Multibax Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCS Steel position performs unexpectedly, Multibax Public 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 Multibax Public will offset losses from the drop in Multibax Public's long position.| MCS Steel vs. PTT Public | MCS Steel vs. PTT Exploration and | MCS Steel vs. The Siam Cement | MCS Steel vs. CP ALL Public |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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