Correlation Between MCS Steel and PTT Global

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

Diversification Opportunities for MCS Steel and PTT Global

0.76

Correlation Coefficient

MCS Steel  PTT Global

Poor diversification

The 3 months correlation between MCS and PTT is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MCS Steel Public and PTT Global Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Global Chemical 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 PTT Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Global Chemical has no effect on the direction of MCS Steel i.e., MCS Steel and PTT Global go up and down completely randomly.

Pair Corralation between MCS Steel and PTT Global

Assuming the 90 days trading horizon MCS Steel Public is expected to generate 0.34 times more return on investment than PTT Global. However, MCS Steel Public is 2.93 times less risky than PTT Global. It trades about -0.12 of its potential returns per unit of risk. PTT Global Chemical is currently generating about -0.12 per unit of risk. If you would invest  650.00  in MCS Steel Public on October 24, 2024 and sell it today you would lose (15.00) from holding MCS Steel Public or give up 2.31% of portfolio value over 90 days.

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

MCS Steel Public  vs.  PTT Global Chemical

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.

PTT Global Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTT Global Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with MCS Steel and PTT Global

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

The idea behind MCS Steel Public and PTT Global Chemical 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.