Correlation Between Cal Maine and SLC Agricola

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

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

Diversification Opportunities for Cal Maine and SLC Agricola

-0.21

Correlation Coefficient

Cal Maine  SLC Agricola

Very good diversification

The 3 months correlation between Cal and SLC is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and SLC Agricola SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLC Agricola SA and Cal Maine 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 Cal Maine Foods are associated (or correlated) with SLC Agricola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLC Agricola SA has no effect on the direction of Cal Maine i.e., Cal Maine and SLC Agricola go up and down completely randomly.

Pair Corralation between Cal Maine and SLC Agricola

Given the investment horizon of 90 days Cal Maine Foods is expected to under-perform the SLC Agricola. In addition to that, Cal Maine is 2.55 times more volatile than SLC Agricola SA. It trades about -0.21 of its total potential returns per unit of risk. SLC Agricola SA is currently generating about 0.08 per unit of volatility. If you would invest  300.00  in SLC Agricola SA on December 4, 2024 and sell it today you would earn a total of  6.00  from holding SLC Agricola SA or generate 2.0% return on investment over 90 days.

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

Cal Maine Foods  vs.  SLC Agricola SA

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.

SLC Agricola SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SLC Agricola SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking indicators, SLC Agricola is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cal Maine and SLC Agricola

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

The idea behind Cal Maine Foods and SLC Agricola SA 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.