Correlation Between Cal Maine and Komatsu
Can any of the company-specific risk be diversified away by investing in both Cal Maine and Komatsu 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 Komatsu 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 Komatsu, you can compare the effects of market volatilities on Cal Maine and Komatsu 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 Komatsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and Komatsu.
Diversification Opportunities for Cal Maine and Komatsu
Very poor diversification
The 3 months correlation between Cal and Komatsu is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Komatsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komatsu 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 Komatsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komatsu has no effect on the direction of Cal Maine i.e., Cal Maine and Komatsu go up and down completely randomly.
Pair Corralation between Cal Maine and Komatsu
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 2.17 times more return on investment than Komatsu. However, Cal Maine is 2.17 times more volatile than Komatsu. It trades about 0.23 of its potential returns per unit of risk. Komatsu is currently generating about 0.17 per unit of risk. If you would invest 9,824 in Cal Maine Foods on October 23, 2024 and sell it today you would earn a total of 1,181 from holding Cal Maine Foods or generate 12.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. Komatsu
Performance |
| Timeline |
| Cal Maine Foods |
| Komatsu |
Cal Maine and Komatsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and Komatsu
The main advantage of trading using opposite Cal Maine and Komatsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, Komatsu 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 Komatsu will offset losses from the drop in Komatsu's long position.| Cal Maine vs. Zoom Video Communications | Cal Maine vs. Mitsui Chemicals | Cal Maine vs. Khiron Life Sciences | Cal Maine vs. Siamgas And Petrochemicals |
| Komatsu vs. Gold Road Resources | Komatsu vs. Austevoll Seafood ASA | Komatsu vs. BII Railway Transportation | Komatsu 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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