Correlation Between PTT Exploration and MCS Steel

Can any of the company-specific risk be diversified away by investing in both PTT Exploration and MCS Steel 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 PTT Exploration and MCS Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PTT Exploration and and MCS Steel Public, you can compare the effects of market volatilities on PTT Exploration and MCS Steel 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 PTT Exploration with a short position of MCS Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTT Exploration and MCS Steel.

Diversification Opportunities for PTT Exploration and MCS Steel

-0.05

Correlation Coefficient

PTT Exploration  MCS Steel

Good diversification

The 3 months correlation between PTT and MCS is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding PTT Exploration and and MCS Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCS Steel Public and PTT Exploration 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 PTT Exploration and are associated (or correlated) with MCS Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCS Steel Public has no effect on the direction of PTT Exploration i.e., PTT Exploration and MCS Steel go up and down completely randomly.

Pair Corralation between PTT Exploration and MCS Steel

Assuming the 90 days trading horizon PTT Exploration and is expected to under-perform the MCS Steel. But the stock apears to be less risky and, when comparing its historical volatility, PTT Exploration and is 1.76 times less risky than MCS Steel. The stock trades about -0.37 of its potential returns per unit of risk. The MCS Steel Public is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  620.00  in MCS Steel Public on December 2, 2024 and sell it today you would earn a total of  90.00  from holding MCS Steel Public or generate 14.52% return on investment over 90 days.

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

PTT Exploration and  vs.  MCS Steel Public

PTT Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days PTT Exploration and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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.

MCS Steel Public

Risk-Adjusted Performance

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 quite persistent basic indicators, MCS Steel is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PTT Exploration and MCS Steel

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

The idea behind PTT Exploration and and MCS Steel 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.