Correlation Between Nine Dragons and CAL-MAINE FOODS
Can any of the company-specific risk be diversified away by investing in both Nine Dragons 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 Nine Dragons 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 Nine Dragons Paper and CAL MAINE FOODS, you can compare the effects of market volatilities on Nine Dragons 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 Nine Dragons with a short position of CAL-MAINE FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Dragons and CAL-MAINE FOODS.
Diversification Opportunities for Nine Dragons and CAL-MAINE FOODS
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nine and CAL-MAINE is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nine Dragons Paper 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 Nine Dragons 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 Nine Dragons Paper 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 Nine Dragons i.e., Nine Dragons and CAL-MAINE FOODS go up and down completely randomly.
Pair Corralation between Nine Dragons and CAL-MAINE FOODS
Assuming the 90 days horizon Nine Dragons Paper is expected to under-perform the CAL-MAINE FOODS. In addition to that, Nine Dragons is 2.4 times more volatile than CAL MAINE FOODS. It trades about -0.02 of its total potential returns per unit of risk. CAL MAINE FOODS is currently generating about 0.08 per unit of volatility. If you would invest 4,449 in CAL MAINE FOODS on August 31, 2024 and sell it today you would earn a total of 4,703 from holding CAL MAINE FOODS or generate 105.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nine Dragons Paper vs. CAL MAINE FOODS
Performance |
| Timeline |
| Nine Dragons Paper |
| CAL MAINE FOODS |
Nine Dragons and CAL-MAINE FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nine Dragons and CAL-MAINE FOODS
The main advantage of trading using opposite Nine Dragons and CAL-MAINE FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Dragons 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's long position.| Nine Dragons vs. METHODE ELECTRONICS | Nine Dragons vs. TYSON FOODS A | Nine Dragons vs. Nucletron Electronic Aktiengesellschaft | Nine Dragons vs. STMicroelectronics NV |
| CAL-MAINE FOODS vs. Verizon Communications | CAL-MAINE FOODS vs. Spirent Communications plc | CAL-MAINE FOODS vs. WillScot Mobile Mini | CAL-MAINE FOODS vs. Calibre Mining Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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