Correlation Between Cal Maine and VPower Group
Can any of the company-specific risk be diversified away by investing in both Cal Maine and VPower Group 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 VPower Group 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 VPower Group International, you can compare the effects of market volatilities on Cal Maine and VPower Group 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 VPower Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and VPower Group.
Diversification Opportunities for Cal Maine and VPower Group
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cal and VPower is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and VPower Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VPower Group Interna 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 VPower Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VPower Group Interna has no effect on the direction of Cal Maine i.e., Cal Maine and VPower Group go up and down completely randomly.
Pair Corralation between Cal Maine and VPower Group
Assuming the 90 days trading horizon Cal Maine is expected to generate 3.35 times less return on investment than VPower Group. But when comparing it to its historical volatility, Cal Maine Foods is 4.84 times less risky than VPower Group. It trades about 0.04 of its potential returns per unit of risk. VPower Group International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1.10 in VPower Group International on October 14, 2024 and sell it today you would lose (0.10) from holding VPower Group International or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. VPower Group International
Performance |
| Timeline |
| Cal Maine Foods |
| VPower Group Interna |
Cal Maine and VPower Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and VPower Group
The main advantage of trading using opposite Cal Maine and VPower Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, VPower Group 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 VPower Group will offset losses from the drop in VPower Group's long position.The idea behind Cal Maine Foods and VPower Group International 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.| VPower Group vs. Vienna Insurance Group | VPower Group vs. Urban Outfitters | VPower Group vs. REVO INSURANCE SPA | VPower Group vs. Universal Insurance Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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