Correlation Between MCS Steel and Millcon Steel

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

Diversification Opportunities for MCS Steel and Millcon Steel

0.59

Correlation Coefficient

MCS Steel  Millcon Steel

Very weak diversification

The 3 months correlation between MCS and Millcon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding MCS Steel Public and Millcon Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millcon Steel 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 Millcon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millcon Steel Public has no effect on the direction of MCS Steel i.e., MCS Steel and Millcon Steel go up and down completely randomly.

Pair Corralation between MCS Steel and Millcon Steel

Assuming the 90 days trading horizon MCS Steel Public is expected to under-perform the Millcon Steel. But the stock apears to be less risky and, when comparing its historical volatility, MCS Steel Public is 7.01 times less risky than Millcon Steel. The stock trades about -0.33 of its potential returns per unit of risk. The Millcon Steel Public is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Millcon Steel Public on October 9, 2024 and sell it today you would lose (1.00) from holding Millcon Steel Public or give up 10.0% 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.  Millcon Steel 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 weak 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.

Millcon Steel Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Millcon Steel Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals 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 Millcon Steel

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

The idea behind MCS Steel Public and Millcon 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.