Correlation Between Cal Maine and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Cal Maine and INDOFOOD AGRI 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 INDOFOOD AGRI 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 INDOFOOD AGRI RES, you can compare the effects of market volatilities on Cal Maine and INDOFOOD AGRI 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 INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and INDOFOOD AGRI.
Diversification Opportunities for Cal Maine and INDOFOOD AGRI
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cal and INDOFOOD is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and INDOFOOD AGRI RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOFOOD AGRI RES 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 INDOFOOD AGRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOFOOD AGRI RES has no effect on the direction of Cal Maine i.e., Cal Maine and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Cal Maine and INDOFOOD AGRI
Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 0.99 times more return on investment than INDOFOOD AGRI. However, Cal Maine Foods is 1.01 times less risky than INDOFOOD AGRI. It trades about 0.1 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.02 per unit of risk. If you would invest 4,526 in Cal Maine Foods on October 19, 2024 and sell it today you would earn a total of 6,639 from holding Cal Maine Foods or generate 146.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Maine Foods vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| Cal Maine Foods |
| INDOFOOD AGRI RES |
Cal Maine and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Maine and INDOFOOD AGRI
The main advantage of trading using opposite Cal Maine and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, INDOFOOD AGRI 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 INDOFOOD AGRI will offset losses from the drop in INDOFOOD AGRI's long position.| Cal Maine vs. Aluminum of | Cal Maine vs. Dairy Farm International | Cal Maine vs. SIERRA METALS | Cal Maine vs. Air Transport Services |
| INDOFOOD AGRI vs. CAREER EDUCATION | INDOFOOD AGRI vs. Heidelberg Materials AG | INDOFOOD AGRI vs. Adtalem Global Education | INDOFOOD AGRI vs. Strategic Education |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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