Correlation Between Lalin Property and MCS Steel

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

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

Diversification Opportunities for Lalin Property and MCS Steel

-0.55

Correlation Coefficient

Lalin Property  MCS Steel

Excellent diversification

The 3 months correlation between Lalin and MCS is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lalin Property Public and MCS Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCS Steel Public and Lalin Property 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 Lalin Property Public are associated (or correlated) with MCS Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCS Steel Public has no effect on the direction of Lalin Property i.e., Lalin Property and MCS Steel go up and down completely randomly.

Pair Corralation between Lalin Property and MCS Steel

Assuming the 90 days trading horizon Lalin Property Public is expected to under-perform the MCS Steel. But the stock apears to be less risky and, when comparing its historical volatility, Lalin Property Public is 1.46 times less risky than MCS Steel. The stock trades about -0.13 of its potential returns per unit of risk. The MCS Steel Public is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  670.00  in MCS Steel Public on December 30, 2024 and sell it today you would earn a total of  65.00  from holding MCS Steel Public or generate 9.7% return on investment over 90 days.

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

Lalin Property Public  vs.  MCS Steel Public

Lalin Property Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lalin Property Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

MCS Steel Public

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MCS Steel Public are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, MCS Steel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lalin Property and MCS Steel

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

The idea behind Lalin Property Public and MCS Steel Public 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.