Correlation Between MCS Steel and Thai OPP

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

Diversification Opportunities for MCS Steel and Thai OPP

0.27

Correlation Coefficient

MCS Steel  Thai OPP

Modest diversification

The 3 months correlation between MCS and Thai is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding MCS Steel Public and Thai OPP Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai OPP 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 Thai OPP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai OPP Public has no effect on the direction of MCS Steel i.e., MCS Steel and Thai OPP go up and down completely randomly.

Pair Corralation between MCS Steel and Thai OPP

Assuming the 90 days trading horizon MCS Steel is expected to generate 1.04 times less return on investment than Thai OPP. But when comparing it to its historical volatility, MCS Steel Public is 1.0 times less risky than Thai OPP. It trades about 0.04 of its potential returns per unit of risk. Thai OPP Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  15,390  in Thai OPP Public on October 9, 2024 and sell it today you would earn a total of  1,310  from holding Thai OPP Public or generate 8.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

MCS Steel Public  vs.  Thai OPP 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.

Thai OPP Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai OPP Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Thai OPP is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with MCS Steel and Thai OPP

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

The idea behind MCS Steel Public and Thai OPP 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..