Correlation Between Cal-Maine Foods and Hang Seng
Can any of the company-specific risk be diversified away by investing in both Cal-Maine Foods and Hang Seng 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 Hang Seng 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 Hang Seng Bank, you can compare the effects of market volatilities on Cal-Maine Foods and Hang Seng 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 Hang Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal-Maine Foods and Hang Seng.
Diversification Opportunities for Cal-Maine Foods and Hang Seng
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cal-Maine and Hang is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Hang Seng Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Seng Bank 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 Hang Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Seng Bank has no effect on the direction of Cal-Maine Foods i.e., Cal-Maine Foods and Hang Seng go up and down completely randomly.
Pair Corralation between Cal-Maine Foods and Hang Seng
Assuming the 90 days horizon Cal Maine Foods is expected to generate 1.15 times more return on investment than Hang Seng. However, Cal-Maine Foods is 1.15 times more volatile than Hang Seng Bank. It trades about 0.28 of its potential returns per unit of risk. Hang Seng Bank is currently generating about 0.11 per unit of risk. If you would invest 6,266 in Cal Maine Foods on September 4, 2024 and sell it today you would earn a total of 3,074 from holding Cal Maine Foods or generate 49.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.46% |
| Values | Daily Returns |
Cal Maine Foods vs. Hang Seng Bank
Performance |
| Timeline |
| Cal Maine Foods |
| Hang Seng Bank |
Cal-Maine Foods and Hang Seng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal-Maine Foods and Hang Seng
The main advantage of trading using opposite Cal-Maine Foods and Hang Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal-Maine Foods position performs unexpectedly, Hang Seng 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 Hang Seng will offset losses from the drop in Hang Seng's long position.| Cal-Maine Foods vs. NXP Semiconductors NV | Cal-Maine Foods vs. Taylor Morrison Home | Cal-Maine Foods vs. Magnachip Semiconductor | Cal-Maine Foods vs. Taiwan Semiconductor Manufacturing |
| Hang Seng vs. Austevoll Seafood ASA | Hang Seng vs. Federal Agricultural Mortgage | Hang Seng vs. Cal Maine Foods | Hang Seng vs. Titan Machinery |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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