Correlation Between MCS Steel and News Network

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

Diversification Opportunities for MCS Steel and News Network

0.07

Correlation Coefficient

MCS Steel  News Network

Significant diversification

The 3 months correlation between MCS and News is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding MCS Steel Public and News Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News Network 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 News Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News Network has no effect on the direction of MCS Steel i.e., MCS Steel and News Network go up and down completely randomly.

Pair Corralation between MCS Steel and News Network

Assuming the 90 days trading horizon MCS Steel is expected to generate 2.82 times less return on investment than News Network. But when comparing it to its historical volatility, MCS Steel Public is 1.18 times less risky than News Network. It trades about 0.05 of its potential returns per unit of risk. News Network is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.00  in News Network on October 11, 2024 and sell it today you would earn a total of  0.00  from holding News Network or generate 0.0% return on investment over 90 days.

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

MCS Steel Public  vs.  News Network

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.

News Network

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in News Network are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, News Network disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MCS Steel and News Network

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

The idea behind MCS Steel Public and News Network 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.