Correlation Between Cal Maine and Nanjing Panda
Can any of the company-specific risk be diversified away by investing in both Cal Maine and Nanjing Panda 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 Nanjing Panda 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 Nanjing Panda Electronics, you can compare the effects of market volatilities on Cal Maine and Nanjing Panda 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 Nanjing Panda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and Nanjing Panda.
Diversification Opportunities for Cal Maine and Nanjing Panda
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cal and Nanjing is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Nanjing Panda Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Panda Electronics 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 Nanjing Panda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Panda Electronics has no effect on the direction of Cal Maine i.e., Cal Maine and Nanjing Panda go up and down completely randomly.
Pair Corralation between Cal Maine and Nanjing Panda
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 0.56 times more return on investment than Nanjing Panda. However, Cal Maine Foods is 1.78 times less risky than Nanjing Panda. It trades about 0.24 of its potential returns per unit of risk. Nanjing Panda Electronics is currently generating about 0.11 per unit of risk. If you would invest 6,239 in Cal Maine Foods on November 2, 2024 and sell it today you would earn a total of 4,731 from holding Cal Maine Foods or generate 75.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.03% |
Values | Daily Returns |
Cal Maine Foods vs. Nanjing Panda Electronics
Performance |
Timeline |
Cal Maine Foods |
Nanjing Panda Electronics |
Cal Maine and Nanjing Panda Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cal Maine and Nanjing Panda
The main advantage of trading using opposite Cal Maine and Nanjing Panda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, Nanjing Panda 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 Nanjing Panda will offset losses from the drop in Nanjing Panda's long position.Cal Maine vs. SLIGRO FOOD GROUP | Cal Maine vs. VIRGIN WINES UK | Cal Maine vs. PRECISION DRILLING P | Cal Maine vs. GWILLI FOOD |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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