Correlation Between Agha Steel and MCB Investment

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

By analyzing existing cross correlation between Agha Steel Industries and MCB Investment Manag, you can compare the effects of market volatilities on Agha Steel and MCB Investment 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 Agha Steel with a short position of MCB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agha Steel and MCB Investment.

Diversification Opportunities for Agha Steel and MCB Investment

-0.74

Correlation Coefficient

Agha Steel  MCB Investment

Pay attention - limited upside

The 3 months correlation between Agha and MCB is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Agha Steel Industries and MCB Investment Manag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB Investment Manag and Agha 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 Agha Steel Industries are associated (or correlated) with MCB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB Investment Manag has no effect on the direction of Agha Steel i.e., Agha Steel and MCB Investment go up and down completely randomly.

Pair Corralation between Agha Steel and MCB Investment

Assuming the 90 days trading horizon Agha Steel Industries is expected to under-perform the MCB Investment. But the stock apears to be less risky and, when comparing its historical volatility, Agha Steel Industries is 1.4 times less risky than MCB Investment. The stock trades about -0.11 of its potential returns per unit of risk. The MCB Investment Manag is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  6,495  in MCB Investment Manag on December 29, 2024 and sell it today you would earn a total of  1,628  from holding MCB Investment Manag or generate 25.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Agha Steel Industries  vs.  MCB Investment Manag

Agha Steel Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agha Steel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

MCB Investment Manag

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MCB Investment Manag are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, MCB Investment disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agha Steel and MCB Investment

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

The idea behind Agha Steel Industries and MCB Investment Manag 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.