Correlation Between KBR and Ming Shing
Can any of the company-specific risk be diversified away by investing in both KBR 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 KBR and Ming Shing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KBR Inc and Ming Shing Group, you can compare the effects of market volatilities on KBR 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 KBR with a short position of Ming Shing. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBR and Ming Shing.
Diversification Opportunities for KBR and Ming Shing
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KBR and Ming is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding KBR 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 KBR 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 KBR 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 KBR i.e., KBR and Ming Shing go up and down completely randomly.
Pair Corralation between KBR and Ming Shing
Considering the 90-day investment horizon KBR is expected to generate 36.65 times less return on investment than Ming Shing. But when comparing it to its historical volatility, KBR Inc is 6.72 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 0.14 of returns per unit of risk over similar time horizon. If you would invest 559.00 in Ming Shing Group on October 29, 2024 and sell it today you would earn a total of 291.00 from holding Ming Shing Group or generate 52.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 17.0% |
| Values | Daily Returns |
KBR Inc vs. Ming Shing Group
Performance |
| Timeline |
| KBR Inc |
| Ming Shing Group |
KBR and Ming Shing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KBR and Ming Shing
The main advantage of trading using opposite KBR and Ming Shing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBR 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 KBR 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.| Ming Shing vs. NL Industries | Ming Shing vs. Avient Corp | Ming Shing vs. Sonos Inc | Ming Shing vs. Planet Fitness |
Check out your portfolio center.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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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