Correlation Between MCS Steel and North East

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

Diversification Opportunities for MCS Steel and North East

0.33

Correlation Coefficient

MCS Steel  North East

Weak diversification

The 3 months correlation between MCS and North is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding MCS Steel Public and North East Rubbers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North East Rubbers 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 North East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North East Rubbers has no effect on the direction of MCS Steel i.e., MCS Steel and North East go up and down completely randomly.

Pair Corralation between MCS Steel and North East

Assuming the 90 days trading horizon MCS Steel Public is expected to generate 1.02 times more return on investment than North East. However, MCS Steel is 1.02 times more volatile than North East Rubbers. It trades about 0.11 of its potential returns per unit of risk. North East Rubbers is currently generating about 0.06 per unit of risk. If you would invest  650.00  in MCS Steel Public on December 21, 2024 and sell it today you would earn a total of  75.00  from holding MCS Steel Public or generate 11.54% return on investment over 90 days.

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

MCS Steel Public  vs.  North East Rubbers

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 8 (%) 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.

North East Rubbers

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in North East Rubbers are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, North East may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with MCS Steel and North East

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

The idea behind MCS Steel Public and North East Rubbers 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..