Correlation Between CAL MAINE and China Construction
Can any of the company-specific risk be diversified away by investing in both CAL MAINE and China Construction 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 CAL MAINE and China Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAL MAINE FOODS and China Construction Bank, you can compare the effects of market volatilities on CAL MAINE and China Construction 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 CAL MAINE with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL MAINE and China Construction.
Diversification Opportunities for CAL MAINE and China Construction
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CAL and China is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank and CAL MAINE 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 CAL MAINE FOODS are associated (or correlated) with China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of CAL MAINE i.e., CAL MAINE and China Construction go up and down completely randomly.
Pair Corralation between CAL MAINE and China Construction
Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 0.63 times more return on investment than China Construction. However, CAL MAINE FOODS is 1.58 times less risky than China Construction. It trades about 0.32 of its potential returns per unit of risk. China Construction Bank is currently generating about 0.09 per unit of risk. If you would invest 6,365 in CAL MAINE FOODS on September 3, 2024 and sell it today you would earn a total of 2,775 from holding CAL MAINE FOODS or generate 43.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAL MAINE FOODS vs. China Construction Bank
Performance |
| Timeline |
| CAL MAINE FOODS |
| China Construction Bank |
CAL MAINE and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL MAINE and China Construction
The main advantage of trading using opposite CAL MAINE and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL MAINE position performs unexpectedly, China Construction 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 China Construction will offset losses from the drop in China Construction's long position.| CAL MAINE vs. LG Display Co | CAL MAINE vs. USWE SPORTS AB | CAL MAINE vs. SINGAPORE AIRLINES | CAL MAINE vs. VIAPLAY GROUP AB |
| China Construction vs. HSBC Holdings plc | China Construction vs. Bank of China | China Construction vs. Commonwealth Bank of |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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