Correlation Between MCS Steel and AP Public

Can any of the company-specific risk be diversified away by investing in both MCS Steel and AP 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 AP 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 AP Public, you can compare the effects of market volatilities on MCS Steel and AP 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 AP Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCS Steel and AP Public.

Diversification Opportunities for MCS Steel and AP Public

0.61

Correlation Coefficient

MCS Steel  AP Public

Poor diversification

The 3 months correlation between MCS and AP Public is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding MCS Steel Public and AP Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP 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 AP Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Public has no effect on the direction of MCS Steel i.e., MCS Steel and AP Public go up and down completely randomly.

Pair Corralation between MCS Steel and AP Public

Assuming the 90 days trading horizon MCS Steel Public is expected to under-perform the AP Public. But the stock apears to be less risky and, when comparing its historical volatility, MCS Steel Public is 1.42 times less risky than AP Public. The stock trades about -0.23 of its potential returns per unit of risk. The AP Public is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  860.00  in AP Public on September 13, 2024 and sell it today you would earn a total of  5.00  from holding AP Public or generate 0.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

MCS Steel Public  vs.  AP Public

MCS Steel Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

AP Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AP 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 persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with MCS Steel and AP Public

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

The idea behind MCS Steel Public and AP 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.