Correlation Between Delta Electronics and MCS Steel

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

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

Diversification Opportunities for Delta Electronics and MCS Steel

0.71

Correlation Coefficient

Delta Electronics  MCS Steel

Poor diversification

The 3 months correlation between Delta and MCS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics Public 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 Delta Electronics 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 Delta Electronics Public 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 Delta Electronics i.e., Delta Electronics and MCS Steel go up and down completely randomly.

Pair Corralation between Delta Electronics and MCS Steel

Assuming the 90 days trading horizon Delta Electronics Public is expected to generate 2.69 times more return on investment than MCS Steel. However, Delta Electronics is 2.69 times more volatile than MCS Steel Public. It trades about 0.26 of its potential returns per unit of risk. MCS Steel Public is currently generating about 0.11 per unit of risk. If you would invest  7,650  in Delta Electronics Public on April 23, 2025 and sell it today you would earn a total of  6,250  from holding Delta Electronics Public or generate 81.7% return on investment over 90 days.

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

Delta Electronics Public  vs.  MCS Steel Public

Delta Electronics Public

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Delta Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

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 8 (%) 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 August 2025.

Pair Trading with Delta Electronics and MCS Steel

The main advantage of trading using opposite Delta Electronics and MCS Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Electronics 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 Delta Electronics Public 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.