Correlation Between MCS Steel and SCB X
Can any of the company-specific risk be diversified away by investing in both MCS Steel and SCB X 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 SCB X 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 SCB X Public, you can compare the effects of market volatilities on MCS Steel and SCB X 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 SCB X. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCS Steel and SCB X.
Diversification Opportunities for MCS Steel and SCB X
Very good diversification
The 3 months correlation between MCS and SCB is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding MCS Steel Public and SCB X Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCB X 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 SCB X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCB X Public has no effect on the direction of MCS Steel i.e., MCS Steel and SCB X go up and down completely randomly.
Pair Corralation between MCS Steel and SCB X
Assuming the 90 days trading horizon MCS Steel Public is expected to generate 2.01 times more return on investment than SCB X. However, MCS Steel is 2.01 times more volatile than SCB X Public. It trades about 0.32 of its potential returns per unit of risk. SCB X Public is currently generating about -0.09 per unit of risk. If you would invest 610.00 in MCS Steel Public on December 4, 2024 and sell it today you would earn a total of 105.00 from holding MCS Steel Public or generate 17.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCS Steel Public vs. SCB X Public
Performance |
| Timeline |
| MCS Steel Public |
| SCB X Public |
MCS Steel and SCB X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCS Steel and SCB X
The main advantage of trading using opposite MCS Steel and SCB X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCS Steel position performs unexpectedly, SCB X 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 SCB X will offset losses from the drop in SCB X'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 |
| SCB X vs. Bioscience Animal Health | SCB X vs. Premier Technology Public | SCB X vs. THONBURI HEALTHCARE GRO NVDR | SCB X vs. Siamgas and Petrochemicals |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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