Correlation Between Construction Partners and Ming Shing

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

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

Diversification Opportunities for Construction Partners and Ming Shing

0.3

Correlation Coefficient

Construction Partners  Ming Shing

Weak diversification

The 3 months correlation between Construction and Ming is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Construction Partners 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 Construction Partners 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 Construction Partners 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 Construction Partners i.e., Construction Partners and Ming Shing go up and down completely randomly.

Pair Corralation between Construction Partners and Ming Shing

Given the investment horizon of 90 days Construction Partners is expected to under-perform the Ming Shing. But the stock apears to be less risky and, when comparing its historical volatility, Construction Partners is 3.51 times less risky than Ming Shing. The stock trades about -0.08 of its potential returns per unit of risk. The Ming Shing Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  642.00  in Ming Shing Group on December 26, 2024 and sell it today you would lose (266.00) from holding Ming Shing Group or give up 41.43% of portfolio value over 90 days.

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

Construction Partners  vs.  Ming Shing Group

Construction Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Construction Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ming Shing Group

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Construction Partners and Ming Shing

The main advantage of trading using opposite Construction Partners and Ming Shing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Construction Partners 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 Construction Partners 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.