Correlation Between Arcosa and Ming Shing

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

By analyzing existing cross correlation between Arcosa Inc and Ming Shing Group, you can compare the effects of market volatilities on Arcosa and Ming Shing 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 Arcosa with a short position of Ming Shing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcosa and Ming Shing.

Diversification Opportunities for Arcosa and Ming Shing

0.49

Correlation Coefficient

Arcosa  Ming Shing

Very weak diversification

The 3 months correlation between Arcosa and Ming is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Arcosa Inc and Ming Shing Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ming Shing Group and Arcosa 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 Arcosa Inc are associated (or correlated) with Ming Shing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ming Shing Group has no effect on the direction of Arcosa i.e., Arcosa and Ming Shing go up and down completely randomly.

Pair Corralation between Arcosa and Ming Shing

Considering the 90-day investment horizon Arcosa Inc is expected to under-perform the Ming Shing. But the stock apears to be less risky and, when comparing its historical volatility, Arcosa Inc is 6.34 times less risky than Ming Shing. The stock trades about -0.39 of its potential returns per unit of risk. The Ming Shing Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  608.00  in Ming Shing Group on October 12, 2024 and sell it today you would lose (91.00) from holding Ming Shing Group or give up 14.97% of portfolio value over 90 days.

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

Arcosa Inc  vs.  Ming Shing Group

Arcosa Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcosa Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Arcosa is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ming Shing Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ming Shing Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Ming Shing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arcosa and Ming Shing

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

The idea behind Arcosa Inc and Ming Shing Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.