Correlation Between CAL-MAINE FOODS and ZhongAn Online

Can any of the company-specific risk be diversified away by investing in both CAL-MAINE FOODS and ZhongAn Online 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 FOODS and ZhongAn Online 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 ZhongAn Online P, you can compare the effects of market volatilities on CAL-MAINE FOODS and ZhongAn Online 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 FOODS with a short position of ZhongAn Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL-MAINE FOODS and ZhongAn Online.

Diversification Opportunities for CAL-MAINE FOODS and ZhongAn Online

-0.86

Correlation Coefficient

CAL-MAINE FOODS  ZhongAn Online

Pay attention - limited upside

The 3 months correlation between CAL-MAINE and ZhongAn is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and ZhongAn Online P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZhongAn Online P and CAL-MAINE FOODS 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 ZhongAn Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZhongAn Online P has no effect on the direction of CAL-MAINE FOODS i.e., CAL-MAINE FOODS and ZhongAn Online go up and down completely randomly.

Pair Corralation between CAL-MAINE FOODS and ZhongAn Online

Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 0.7 times more return on investment than ZhongAn Online. However, CAL MAINE FOODS is 1.44 times less risky than ZhongAn Online. It trades about 0.23 of its potential returns per unit of risk. ZhongAn Online P is currently generating about -0.07 per unit of risk. If you would invest  8,243  in CAL MAINE FOODS on October 22, 2024 and sell it today you would earn a total of  2,567  from holding CAL MAINE FOODS or generate 31.14% return on investment over 90 days.

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

CAL MAINE FOODS  vs.  ZhongAn Online P

CAL MAINE FOODS

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CAL MAINE FOODS are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CAL-MAINE FOODS exhibited solid returns over the last few months and may actually be approaching a breakup point.

ZhongAn Online P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZhongAn Online P has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CAL-MAINE FOODS and ZhongAn Online

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

The idea behind CAL MAINE FOODS and ZhongAn Online P 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.