Correlation Between MCS Steel and Steel Public
Can any of the company-specific risk be diversified away by investing in both MCS Steel and Steel 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 Steel 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 The Steel Public, you can compare the effects of market volatilities on MCS Steel and Steel 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 Steel Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCS Steel and Steel Public.
Diversification Opportunities for MCS Steel and Steel Public
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MCS and Steel is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding MCS Steel Public and The Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel 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 Steel Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Public has no effect on the direction of MCS Steel i.e., MCS Steel and Steel Public go up and down completely randomly.
Pair Corralation between MCS Steel and Steel Public
Assuming the 90 days trading horizon MCS Steel Public is expected to generate 1.0 times more return on investment than Steel Public. However, MCS Steel Public is 1.0 times less risky than Steel Public. It trades about 0.08 of its potential returns per unit of risk. The Steel Public is currently generating about 0.08 per unit of risk. If you would invest 730.00 in MCS Steel Public on September 1, 2024 and sell it today you would lose (20.00) from holding MCS Steel Public or give up 2.74% 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. The Steel Public
Performance |
| Timeline |
| MCS Steel Public |
| Steel Public |
MCS Steel and Steel Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCS Steel and Steel Public
The main advantage of trading using opposite MCS Steel and Steel Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCS Steel position performs unexpectedly, Steel 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 Steel Public will offset losses from the drop in Steel Public'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 |
| Steel Public vs. TMT Steel Public | Steel Public vs. Tycoons Worldwide Group | Steel Public vs. Thai German Products Public | Steel Public vs. Siam Steel Service |
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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