Correlation Between HK Electric and Cal-Maine Foods
Can any of the company-specific risk be diversified away by investing in both HK Electric and Cal-Maine Foods 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 HK Electric and Cal-Maine Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HK Electric Investments and Cal Maine Foods, you can compare the effects of market volatilities on HK Electric and Cal-Maine Foods 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 HK Electric with a short position of Cal-Maine Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Cal-Maine Foods.
Diversification Opportunities for HK Electric and Cal-Maine Foods
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HKT and Cal-Maine is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Cal Maine Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Maine Foods and HK Electric 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 HK Electric Investments are associated (or correlated) with Cal-Maine Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Maine Foods has no effect on the direction of HK Electric i.e., HK Electric and Cal-Maine Foods go up and down completely randomly.
Pair Corralation between HK Electric and Cal-Maine Foods
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 1.57 times more return on investment than Cal-Maine Foods. However, HK Electric is 1.57 times more volatile than Cal Maine Foods. It trades about 0.1 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.11 per unit of risk. If you would invest 22.00 in HK Electric Investments on August 31, 2024 and sell it today you would earn a total of 40.00 from holding HK Electric Investments or generate 181.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
HK Electric Investments vs. Cal Maine Foods
Performance |
| Timeline |
| HK Electric Investments |
| Cal Maine Foods |
HK Electric and Cal-Maine Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Cal-Maine Foods
The main advantage of trading using opposite HK Electric and Cal-Maine Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Cal-Maine Foods 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 Cal-Maine Foods will offset losses from the drop in Cal-Maine Foods' long position.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
| Cal-Maine Foods vs. PICKN PAY STORES | Cal-Maine Foods vs. GungHo Online Entertainment | Cal-Maine Foods vs. SPARTAN STORES | Cal-Maine Foods vs. GALENA MINING LTD |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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