Correlation Between MCS Steel and Bangsaphan Barmill

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

Diversification Opportunities for MCS Steel and Bangsaphan Barmill

0.47

Correlation Coefficient

MCS Steel  Bangsaphan Barmill

Very weak diversification

The 3 months correlation between MCS and Bangsaphan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding MCS Steel Public and Bangsaphan Barmill Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangsaphan Barmill 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 Bangsaphan Barmill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangsaphan Barmill Public has no effect on the direction of MCS Steel i.e., MCS Steel and Bangsaphan Barmill go up and down completely randomly.

Pair Corralation between MCS Steel and Bangsaphan Barmill

Assuming the 90 days trading horizon MCS Steel Public is expected to under-perform the Bangsaphan Barmill. But the stock apears to be less risky and, when comparing its historical volatility, MCS Steel Public is 2.23 times less risky than Bangsaphan Barmill. The stock trades about -0.37 of its potential returns per unit of risk. The Bangsaphan Barmill Public is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  72.00  in Bangsaphan Barmill Public on October 25, 2024 and sell it today you would lose (1.00) from holding Bangsaphan Barmill Public or give up 1.39% of portfolio value over 90 days.

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

MCS Steel Public  vs.  Bangsaphan Barmill 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 conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bangsaphan Barmill Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with MCS Steel and Bangsaphan Barmill

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

The idea behind MCS Steel Public and Bangsaphan Barmill 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.