Correlation Between Cal-Maine Foods and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both Cal-Maine Foods and Highlight Communications 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 Foods and Highlight Communications 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 Highlight Communications AG, you can compare the effects of market volatilities on Cal-Maine Foods and Highlight Communications 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 Foods with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal-Maine Foods and Highlight Communications.
Diversification Opportunities for Cal-Maine Foods and Highlight Communications
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cal-Maine and Highlight is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and Cal-Maine Foods 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 Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of Cal-Maine Foods i.e., Cal-Maine Foods and Highlight Communications go up and down completely randomly.
Pair Corralation between Cal-Maine Foods and Highlight Communications
Assuming the 90 days horizon Cal-Maine Foods is expected to generate 1.68 times less return on investment than Highlight Communications. But when comparing it to its historical volatility, Cal Maine Foods is 1.65 times less risky than Highlight Communications. It trades about 0.32 of its potential returns per unit of risk. Highlight Communications AG is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Highlight Communications AG on September 1, 2024 and sell it today you would earn a total of 22.00 from holding Highlight Communications AG or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. Highlight Communications AG
Performance |
| Timeline |
| Cal Maine Foods |
| Highlight Communications |
Cal-Maine Foods and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal-Maine Foods and Highlight Communications
The main advantage of trading using opposite Cal-Maine Foods and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal-Maine Foods position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.| Cal-Maine Foods vs. Gamma Communications plc | Cal-Maine Foods vs. Cogent Communications Holdings | Cal-Maine Foods vs. Entravision Communications | Cal-Maine Foods vs. Highlight Communications AG |
| Highlight Communications vs. CNVISION MEDIA | Highlight Communications vs. PLAYTIKA HOLDING DL 01 | Highlight Communications vs. Seven West Media | Highlight Communications vs. Playa Hotels Resorts |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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