Correlation Between Comfort Systems and Ming Shing

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

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

Diversification Opportunities for Comfort Systems and Ming Shing

0.75

Correlation Coefficient

Comfort Systems  Ming Shing

Poor diversification

The 3 months correlation between Comfort and Ming is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Comfort Systems USA 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 Comfort Systems 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 Comfort Systems USA 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 Comfort Systems i.e., Comfort Systems and Ming Shing go up and down completely randomly.

Pair Corralation between Comfort Systems and Ming Shing

Considering the 90-day investment horizon Comfort Systems USA is expected to generate 0.28 times more return on investment than Ming Shing. However, Comfort Systems USA is 3.61 times less risky than Ming Shing. It trades about 0.09 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  38,718  in Comfort Systems USA on September 22, 2024 and sell it today you would earn a total of  5,126  from holding Comfort Systems USA or generate 13.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	31.25%
Values	Daily Returns

Comfort Systems USA  vs.  Ming Shing Group

Comfort Systems USA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Comfort Systems USA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, Comfort Systems showed 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 inconsistent 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 Comfort Systems and Ming Shing

The main advantage of trading using opposite Comfort Systems and Ming Shing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comfort Systems 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 Comfort Systems USA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.