Correlation Between Mycron Steel and PESTECH International

Can any of the company-specific risk be diversified away by investing in both Mycron Steel and PESTECH International 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 Mycron Steel and PESTECH International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mycron Steel Bhd and PESTECH International Bhd, you can compare the effects of market volatilities on Mycron Steel and PESTECH International 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 Mycron Steel with a short position of PESTECH International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mycron Steel and PESTECH International.

Diversification Opportunities for Mycron Steel and PESTECH International

-0.45

Correlation Coefficient

Mycron Steel  PESTECH International

Very good diversification

The 3 months correlation between Mycron and PESTECH is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mycron Steel Bhd and PESTECH International Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PESTECH International Bhd and Mycron 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 Mycron Steel Bhd are associated (or correlated) with PESTECH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PESTECH International Bhd has no effect on the direction of Mycron Steel i.e., Mycron Steel and PESTECH International go up and down completely randomly.

Pair Corralation between Mycron Steel and PESTECH International

Assuming the 90 days trading horizon Mycron Steel Bhd is expected to under-perform the PESTECH International. But the stock apears to be less risky and, when comparing its historical volatility, Mycron Steel Bhd is 1.72 times less risky than PESTECH International. The stock trades about -0.03 of its potential returns per unit of risk. The PESTECH International Bhd is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  14.00  in PESTECH International Bhd on October 10, 2024 and sell it today you would earn a total of  6.00  from holding PESTECH International Bhd or generate 42.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mycron Steel Bhd  vs.  PESTECH International Bhd

Mycron Steel Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mycron Steel Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Mycron Steel is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

PESTECH International Bhd

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PESTECH International Bhd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, PESTECH International disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mycron Steel and PESTECH International

The main advantage of trading using opposite Mycron Steel and PESTECH International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mycron Steel position performs unexpectedly, PESTECH International 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 PESTECH International will offset losses from the drop in PESTECH International's long position.

The idea behind Mycron Steel Bhd and PESTECH International Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.