Correlation Between Cal Maine and DATANG INTL
Can any of the company-specific risk be diversified away by investing in both Cal Maine and DATANG INTL 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 DATANG INTL 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 DATANG INTL POW, you can compare the effects of market volatilities on Cal Maine and DATANG INTL 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 DATANG INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and DATANG INTL.
Diversification Opportunities for Cal Maine and DATANG INTL
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cal and DATANG is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and DATANG INTL POW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATANG INTL POW 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 DATANG INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATANG INTL POW has no effect on the direction of Cal Maine i.e., Cal Maine and DATANG INTL go up and down completely randomly.
Pair Corralation between Cal Maine and DATANG INTL
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 0.57 times more return on investment than DATANG INTL. However, Cal Maine Foods is 1.75 times less risky than DATANG INTL. It trades about 0.36 of its potential returns per unit of risk. DATANG INTL POW is currently generating about 0.02 per unit of risk. If you would invest 8,301 in Cal Maine Foods on September 19, 2024 and sell it today you would earn a total of 2,539 from holding Cal Maine Foods or generate 30.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. DATANG INTL POW
Performance |
| Timeline |
| Cal Maine Foods |
| DATANG INTL POW |
Cal Maine and DATANG INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and DATANG INTL
The main advantage of trading using opposite Cal Maine and DATANG INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, DATANG INTL 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 DATANG INTL will offset losses from the drop in DATANG INTL's long position.| Cal Maine vs. INDO RAMA SYNTHETIC | Cal Maine vs. KINGBOARD CHEMICAL | Cal Maine vs. ADRIATIC METALS LS 013355 | Cal Maine vs. Evolution Mining Limited |
| DATANG INTL vs. Apple Inc | DATANG INTL vs. Apple Inc | DATANG INTL vs. Apple Inc | DATANG INTL vs. Apple Inc |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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