Correlation Between CAL MAINE and Astral Foods

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

Diversification Opportunities for CAL MAINE and Astral Foods

0.36

Correlation Coefficient

CAL MAINE  Astral Foods

Weak diversification

The 3 months correlation between CAL and Astral is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Astral Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astral Foods Limited 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 Astral Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astral Foods Limited has no effect on the direction of CAL MAINE i.e., CAL MAINE and Astral Foods go up and down completely randomly.

Pair Corralation between CAL MAINE and Astral Foods

Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 0.93 times more return on investment than Astral Foods. However, CAL MAINE FOODS is 1.08 times less risky than Astral Foods. It trades about 0.29 of its potential returns per unit of risk. Astral Foods Limited is currently generating about 0.14 per unit of risk. If you would invest  8,926  in CAL MAINE FOODS on September 22, 2024 and sell it today you would earn a total of  1,050  from holding CAL MAINE FOODS or generate 11.76% return on investment over 90 days.

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

CAL MAINE FOODS  vs.  Astral Foods Limited

CAL MAINE FOODS

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CAL MAINE FOODS are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CAL MAINE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Astral Foods Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Astral Foods is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CAL MAINE and Astral Foods

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

The idea behind CAL MAINE FOODS and Astral Foods Limited 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.