Correlation Between Steel Dynamics and MCB GROUP
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and MCB GROUP 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 Steel Dynamics and MCB GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and MCB GROUP LIMITED, you can compare the effects of market volatilities on Steel Dynamics and MCB GROUP 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 Steel Dynamics with a short position of MCB GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and MCB GROUP.
Diversification Opportunities for Steel Dynamics and MCB GROUP
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Steel and MCB is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and MCB GROUP LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB GROUP LIMITED and Steel Dynamics 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 Steel Dynamics are associated (or correlated) with MCB GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB GROUP LIMITED has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and MCB GROUP go up and down completely randomly.
Pair Corralation between Steel Dynamics and MCB GROUP
Given the investment horizon of 90 days Steel Dynamics is expected to generate 3.08 times more return on investment than MCB GROUP. However, Steel Dynamics is 3.08 times more volatile than MCB GROUP LIMITED. It trades about 0.04 of its potential returns per unit of risk. MCB GROUP LIMITED is currently generating about 0.11 per unit of risk. If you would invest 9,988 in Steel Dynamics on September 12, 2024 and sell it today you would earn a total of 3,448 from holding Steel Dynamics or generate 34.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.79% |
| Values | Daily Returns |
Steel Dynamics vs. MCB GROUP LIMITED
Performance |
| Timeline |
| Steel Dynamics |
| MCB GROUP LIMITED |
Steel Dynamics and MCB GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and MCB GROUP
The main advantage of trading using opposite Steel Dynamics and MCB GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, MCB GROUP 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 MCB GROUP will offset losses from the drop in MCB GROUP's long position.| Steel Dynamics vs. Cleveland Cliffs | Steel Dynamics vs. United States Steel | Steel Dynamics vs. ArcelorMittal SA ADR | Steel Dynamics vs. Reliance Steel Aluminum |
| MCB GROUP vs. UNITED INVESTMENTS LTD | MCB GROUP vs. PHOENIX BEVERAGES LTD | MCB GROUP vs. QUALITY BEVERAGES LTD | MCB GROUP vs. FINCORP INVESTMENT LTD |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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