Correlation Between Bowman Consulting and Ming Shing

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

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

Diversification Opportunities for Bowman Consulting and Ming Shing

0.72

Correlation Coefficient

Bowman Consulting  Ming Shing

Poor diversification

The 3 months correlation between Bowman and Ming is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bowman Consulting Group 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 Bowman Consulting 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 Bowman Consulting Group 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 Bowman Consulting i.e., Bowman Consulting and Ming Shing go up and down completely randomly.

Pair Corralation between Bowman Consulting and Ming Shing

Given the investment horizon of 90 days Bowman Consulting Group is expected to generate 0.37 times more return on investment than Ming Shing. However, Bowman Consulting Group is 2.71 times less risky than Ming Shing. It trades about -0.03 of its potential returns per unit of risk. Ming Shing Group is currently generating about -0.11 per unit of risk. If you would invest  3,552  in Bowman Consulting Group on September 24, 2024 and sell it today you would lose (1,113) from holding Bowman Consulting Group or give up 31.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	8.47%
Values	Daily Returns

Bowman Consulting Group  vs.  Ming Shing Group

Bowman Consulting

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bowman Consulting Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Bowman Consulting may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ming Shing Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ming Shing Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Bowman Consulting and Ming Shing

The main advantage of trading using opposite Bowman Consulting and Ming Shing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowman Consulting 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 Bowman Consulting Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.