Correlation Between MCS Steel and Megachem Public

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

Diversification Opportunities for MCS Steel and Megachem Public

0.6

Correlation Coefficient

MCS Steel  Megachem Public

Poor diversification

The 3 months correlation between MCS and Megachem is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MCS Steel Public and Megachem Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megachem 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 Megachem Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megachem Public has no effect on the direction of MCS Steel i.e., MCS Steel and Megachem Public go up and down completely randomly.

Pair Corralation between MCS Steel and Megachem Public

Assuming the 90 days trading horizon MCS Steel Public is expected to generate 0.94 times more return on investment than Megachem Public. However, MCS Steel Public is 1.06 times less risky than Megachem Public. It trades about 0.1 of its potential returns per unit of risk. Megachem Public is currently generating about 0.02 per unit of risk. If you would invest  755.00  in MCS Steel Public on April 24, 2025 and sell it today you would earn a total of  70.00  from holding MCS Steel Public or generate 9.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

MCS Steel Public  vs.  Megachem 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 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.

Megachem Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Megachem Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Megachem Public 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 MCS Steel and Megachem Public

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

The idea behind MCS Steel Public and Megachem 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 Stocks Directory module to find actively traded stocks across global markets.