Correlation Between GRUPO CARSO and CAL MAINE

Can any of the company-specific risk be diversified away by investing in both GRUPO CARSO and CAL MAINE 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 GRUPO CARSO and CAL MAINE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GRUPO CARSO A1 and CAL MAINE FOODS, you can compare the effects of market volatilities on GRUPO CARSO and CAL MAINE 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 GRUPO CARSO with a short position of CAL MAINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRUPO CARSO and CAL MAINE.

Diversification Opportunities for GRUPO CARSO and CAL MAINE

0.07

Correlation Coefficient

GRUPO CARSO  CAL MAINE

Significant diversification

The 3 months correlation between GRUPO and CAL is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding GRUPO CARSO A1 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 GRUPO CARSO 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 GRUPO CARSO A1 are associated (or correlated) with CAL MAINE. 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 GRUPO CARSO i.e., GRUPO CARSO and CAL MAINE go up and down completely randomly.

Pair Corralation between GRUPO CARSO and CAL MAINE

Assuming the 90 days trading horizon GRUPO CARSO is expected to generate 6.83 times less return on investment than CAL MAINE. In addition to that, GRUPO CARSO is 2.6 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 0.23 per unit of volatility. If you would invest  9,154  in CAL MAINE FOODS on September 24, 2024 and sell it today you would earn a total of  822.00  from holding CAL MAINE FOODS or generate 8.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GRUPO CARSO A1  vs.  CAL MAINE FOODS

GRUPO CARSO A1

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPO CARSO A1 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GRUPO CARSO may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CAL MAINE FOODS

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CAL MAINE FOODS are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CAL MAINE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GRUPO CARSO and CAL MAINE

The main advantage of trading using opposite GRUPO CARSO and CAL MAINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRUPO CARSO position performs unexpectedly, CAL MAINE 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 will offset losses from the drop in CAL MAINE's long position.

The idea behind GRUPO CARSO A1 and CAL MAINE FOODS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.