Correlation Between Forafric Global and Cal Maine

Can any of the company-specific risk be diversified away by investing in both Forafric Global 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 Forafric Global and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Forafric Global PLC and Cal Maine Foods, you can compare the effects of market volatilities on Forafric Global 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 Forafric Global with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forafric Global and Cal Maine.

Diversification Opportunities for Forafric Global and Cal Maine

0.64

Correlation Coefficient

Forafric Global  Cal Maine

Poor diversification

The 3 months correlation between Forafric and Cal is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Forafric Global PLC 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 Forafric Global 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 Forafric Global PLC 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 Forafric Global i.e., Forafric Global and Cal Maine go up and down completely randomly.

Pair Corralation between Forafric Global and Cal Maine

Assuming the 90 days horizon Forafric Global PLC is expected to under-perform the Cal Maine. In addition to that, Forafric Global is 2.68 times more volatile than Cal Maine Foods. It trades about -0.09 of its total potential returns per unit of risk. Cal Maine Foods is currently generating about -0.03 per unit of volatility. If you would invest  10,066  in Cal Maine Foods on December 29, 2024 and sell it today you would lose (845.00) from holding Cal Maine Foods or give up 8.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.16%
Values	Daily Returns

Forafric Global PLC  vs.  Cal Maine Foods

Forafric Global PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Forafric Global PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Cal Maine Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cal Maine Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Cal Maine is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Forafric Global and Cal Maine

The main advantage of trading using opposite Forafric Global and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forafric Global 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 Forafric Global PLC 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.