Correlation Between Summit Materials and Ming Shing

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

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

Diversification Opportunities for Summit Materials and Ming Shing

0.44

Correlation Coefficient

Summit Materials  Ming Shing

Very weak diversification

The 3 months correlation between Summit and Ming is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials 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 Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and Ming Shing go up and down completely randomly.

Pair Corralation between Summit Materials and Ming Shing

Considering the 90-day investment horizon Summit Materials is expected to generate 2.3 times less return on investment than Ming Shing. But when comparing it to its historical volatility, Summit Materials is 6.02 times less risky than Ming Shing. It trades about 0.16 of its potential returns per unit of risk. Ming Shing Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  559.00  in Ming Shing Group on September 26, 2024 and sell it today you would earn a total of  14.00  from holding Ming Shing Group or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	53.66%
Values	Daily Returns

Summit Materials  vs.  Ming Shing Group

Summit Materials

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

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 fairly stable basic indicators, Ming Shing is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Summit Materials and Ming Shing

The main advantage of trading using opposite Summit Materials and Ming Shing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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 Summit Materials 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.