Correlation Between Shoprite Holdings and Cal-Maine Foods
Can any of the company-specific risk be diversified away by investing in both Shoprite Holdings 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 Shoprite Holdings 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 Shoprite Holdings Limited and Cal Maine Foods, you can compare the effects of market volatilities on Shoprite Holdings 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 Shoprite Holdings with a short position of Cal-Maine Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoprite Holdings and Cal-Maine Foods.
Diversification Opportunities for Shoprite Holdings and Cal-Maine Foods
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shoprite and Cal-Maine is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Shoprite Holdings Limited 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 Shoprite Holdings 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 Shoprite Holdings Limited 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 Shoprite Holdings i.e., Shoprite Holdings and Cal-Maine Foods go up and down completely randomly.
Pair Corralation between Shoprite Holdings and Cal-Maine Foods
Assuming the 90 days horizon Shoprite Holdings Limited is expected to under-perform the Cal-Maine Foods. In addition to that, Shoprite Holdings is 1.08 times more volatile than Cal Maine Foods. It trades about -0.01 of its total potential returns per unit of risk. Cal Maine Foods is currently generating about 0.39 per unit of volatility. If you would invest 8,088 in Cal Maine Foods on September 1, 2024 and sell it today you would earn a total of 1,052 from holding Cal Maine Foods or generate 13.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Shoprite Holdings Limited vs. Cal Maine Foods
Performance |
| Timeline |
| Shoprite Holdings |
| Cal Maine Foods |
Shoprite Holdings and Cal-Maine Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoprite Holdings and Cal-Maine Foods
The main advantage of trading using opposite Shoprite Holdings and Cal-Maine Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoprite Holdings 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.| Shoprite Holdings vs. AIR PRODCHEMICALS | Shoprite Holdings vs. PTT Global Chemical | Shoprite Holdings vs. Silicon Motion Technology | Shoprite Holdings vs. BRIT AMER TOBACCO |
| Cal-Maine Foods vs. Texas Roadhouse | Cal-Maine Foods vs. CODERE ONLINE LUX | Cal-Maine Foods vs. Transportadora de Gas | Cal-Maine Foods vs. Gruppo Mutuionline SpA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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