Correlation Between China Development and CAL MAINE
Can any of the company-specific risk be diversified away by investing in both China Development and CAL MAINE 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 China Development and CAL MAINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Development Bank and CAL MAINE FOODS, you can compare the effects of market volatilities on China Development and CAL MAINE 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 China Development with a short position of CAL MAINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Development and CAL MAINE.
Diversification Opportunities for China Development and CAL MAINE
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and CAL is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding China Development Bank and CAL MAINE FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAL MAINE FOODS and China Development 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 China Development Bank are associated (or correlated) with CAL MAINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAL MAINE FOODS has no effect on the direction of China Development i.e., China Development and CAL MAINE go up and down completely randomly.
Pair Corralation between China Development and CAL MAINE
Assuming the 90 days trading horizon China Development Bank is expected to under-perform the CAL MAINE. In addition to that, China Development is 1.88 times more volatile than CAL MAINE FOODS. It trades about -0.05 of its total potential returns per unit of risk. CAL MAINE FOODS is currently generating about 0.24 per unit of volatility. If you would invest 9,732 in CAL MAINE FOODS on November 3, 2024 and sell it today you would earn a total of 1,348 from holding CAL MAINE FOODS or generate 13.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Development Bank vs. CAL MAINE FOODS
Performance |
| Timeline |
| China Development Bank |
| CAL MAINE FOODS |
China Development and CAL MAINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Development and CAL MAINE
The main advantage of trading using opposite China Development and CAL MAINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Development position performs unexpectedly, CAL MAINE 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 CAL MAINE will offset losses from the drop in CAL MAINE's long position.| China Development vs. Apple Inc | China Development vs. Apple Inc | China Development vs. Apple Inc | China Development vs. Apple Inc |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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