Correlation Between Cal Maine and CN DATANG
Can any of the company-specific risk be diversified away by investing in both Cal Maine and CN DATANG 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 CN DATANG 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 CN DATANG C, you can compare the effects of market volatilities on Cal Maine and CN DATANG 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 CN DATANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and CN DATANG.
Diversification Opportunities for Cal Maine and CN DATANG
Very weak diversification
The 3 months correlation between Cal and DT7 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and CN DATANG C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN DATANG C 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 CN DATANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN DATANG C has no effect on the direction of Cal Maine i.e., Cal Maine and CN DATANG go up and down completely randomly.
Pair Corralation between Cal Maine and CN DATANG
Assuming the 90 days trading horizon Cal Maine is expected to generate 1.18 times less return on investment than CN DATANG. In addition to that, Cal Maine is 1.09 times more volatile than CN DATANG C. It trades about 0.13 of its total potential returns per unit of risk. CN DATANG C is currently generating about 0.16 per unit of volatility. If you would invest 24.00 in CN DATANG C on November 1, 2024 and sell it today you would earn a total of 2.00 from holding CN DATANG C or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. CN DATANG C
Performance |
| Timeline |
| Cal Maine Foods |
| CN DATANG C |
Cal Maine and CN DATANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and CN DATANG
The main advantage of trading using opposite Cal Maine and CN DATANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, CN DATANG 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 CN DATANG will offset losses from the drop in CN DATANG's long position.| Cal Maine vs. SAN MIGUEL BREWERY | Cal Maine vs. The Boston Beer | Cal Maine vs. Yanzhou Coal Mining | Cal Maine vs. Monster Beverage Corp |
| CN DATANG vs. Cal Maine Foods | CN DATANG vs. EBRO FOODS | CN DATANG vs. TYSON FOODS A | CN DATANG vs. Lery Seafood Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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