Correlation Between Cal Maine and WUXI BIOLOGICS
Can any of the company-specific risk be diversified away by investing in both Cal Maine and WUXI BIOLOGICS 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 WUXI BIOLOGICS 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 WUXI BIOLOGICS UNSPADR2, you can compare the effects of market volatilities on Cal Maine and WUXI BIOLOGICS 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 WUXI BIOLOGICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and WUXI BIOLOGICS.
Diversification Opportunities for Cal Maine and WUXI BIOLOGICS
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cal and WUXI is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and WUXI BIOLOGICS UNSPADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WUXI BIOLOGICS UNSPADR2 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 WUXI BIOLOGICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WUXI BIOLOGICS UNSPADR2 has no effect on the direction of Cal Maine i.e., Cal Maine and WUXI BIOLOGICS go up and down completely randomly.
Pair Corralation between Cal Maine and WUXI BIOLOGICS
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 0.46 times more return on investment than WUXI BIOLOGICS. However, Cal Maine Foods is 2.16 times less risky than WUXI BIOLOGICS. It trades about 0.09 of its potential returns per unit of risk. WUXI BIOLOGICS UNSPADR2 is currently generating about -0.03 per unit of risk. If you would invest 4,448 in Cal Maine Foods on September 23, 2024 and sell it today you would earn a total of 5,538 from holding Cal Maine Foods or generate 124.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. WUXI BIOLOGICS UNSPADR2
Performance |
| Timeline |
| Cal Maine Foods |
| WUXI BIOLOGICS UNSPADR2 |
Cal Maine and WUXI BIOLOGICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and WUXI BIOLOGICS
The main advantage of trading using opposite Cal Maine and WUXI BIOLOGICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, WUXI BIOLOGICS 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 WUXI BIOLOGICS will offset losses from the drop in WUXI BIOLOGICS's long position.The idea behind Cal Maine Foods and WUXI BIOLOGICS UNSPADR2 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.| WUXI BIOLOGICS vs. COFCO Joycome Foods | WUXI BIOLOGICS vs. LIFEWAY FOODS | WUXI BIOLOGICS vs. INTER CARS SA | WUXI BIOLOGICS vs. Cal Maine Foods |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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