Correlation Between MCS Steel and Supalai Public

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

Diversification Opportunities for MCS Steel and Supalai Public

0.2

Correlation Coefficient

MCS Steel  Supalai Public

Modest diversification

The 3 months correlation between MCS and Supalai is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding MCS Steel Public and Supalai Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supalai 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 Supalai Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supalai Public has no effect on the direction of MCS Steel i.e., MCS Steel and Supalai Public go up and down completely randomly.

Pair Corralation between MCS Steel and Supalai Public

Assuming the 90 days trading horizon MCS Steel Public is expected to generate 0.88 times more return on investment than Supalai Public. However, MCS Steel Public is 1.14 times less risky than Supalai Public. It trades about 0.1 of its potential returns per unit of risk. Supalai Public is currently generating about -0.05 per unit of risk. If you would invest  670.00  in MCS Steel Public on December 29, 2024 and sell it today you would earn a total of  65.00  from holding MCS Steel Public or generate 9.7% 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.  Supalai Public

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 7 (%) 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.

Supalai Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Supalai Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Supalai Public is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MCS Steel and Supalai Public

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

The idea behind MCS Steel Public and Supalai 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.