Correlation Between MCB Investment and Crescent Steel

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

By analyzing existing cross correlation between MCB Investment Manag and Crescent Steel Allied, you can compare the effects of market volatilities on MCB Investment and Crescent 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 MCB Investment with a short position of Crescent Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Investment and Crescent Steel.

Diversification Opportunities for MCB Investment and Crescent Steel

-0.43

Correlation Coefficient

MCB Investment  Crescent Steel

Very good diversification

The 3 months correlation between MCB and Crescent is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding MCB Investment Manag and Crescent Steel Allied in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Steel Allied and MCB Investment 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 MCB Investment Manag are associated (or correlated) with Crescent Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Steel Allied has no effect on the direction of MCB Investment i.e., MCB Investment and Crescent Steel go up and down completely randomly.

Pair Corralation between MCB Investment and Crescent Steel

Assuming the 90 days trading horizon MCB Investment Manag is expected to generate 1.1 times more return on investment than Crescent Steel. However, MCB Investment is 1.1 times more volatile than Crescent Steel Allied. It trades about 0.22 of its potential returns per unit of risk. Crescent Steel Allied is currently generating about -0.04 per unit of risk. If you would invest  8,550  in MCB Investment Manag on April 24, 2025 and sell it today you would earn a total of  5,174  from holding MCB Investment Manag or generate 60.51% return on investment over 90 days.

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

MCB Investment Manag  vs.  Crescent Steel Allied

MCB Investment Manag

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MCB Investment Manag are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, MCB Investment disclosed solid returns over the last few months and may actually be approaching a breakup point.

Crescent Steel Allied

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crescent Steel Allied has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators 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 MCB Investment and Crescent Steel

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

The idea behind MCB Investment Manag and Crescent Steel Allied 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.