Correlation Between Cal-Maine Foods and Corsair Gaming

Can any of the company-specific risk be diversified away by investing in both Cal-Maine Foods and Corsair Gaming 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 Corsair Gaming 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 Corsair Gaming, you can compare the effects of market volatilities on Cal-Maine Foods and Corsair Gaming 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 Corsair Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal-Maine Foods and Corsair Gaming.

Diversification Opportunities for Cal-Maine Foods and Corsair Gaming

-0.55

Correlation Coefficient

Cal-Maine Foods  Corsair Gaming

Excellent diversification

The 3 months correlation between Cal-Maine and Corsair is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Corsair Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corsair Gaming 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 Corsair Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corsair Gaming has no effect on the direction of Cal-Maine Foods i.e., Cal-Maine Foods and Corsair Gaming go up and down completely randomly.

Pair Corralation between Cal-Maine Foods and Corsair Gaming

Assuming the 90 days horizon Cal Maine Foods is expected to under-perform the Corsair Gaming. But the stock apears to be less risky and, when comparing its historical volatility, Cal Maine Foods is 1.29 times less risky than Corsair Gaming. The stock trades about -0.03 of its potential returns per unit of risk. The Corsair Gaming is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  620.00  in Corsair Gaming on December 28, 2024 and sell it today you would earn a total of  308.00  from holding Corsair Gaming or generate 49.68% return on investment over 90 days.

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

Cal Maine Foods  vs.  Corsair Gaming

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. Despite nearly stable basic indicators, Cal-Maine Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Corsair Gaming

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Corsair Gaming are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Corsair Gaming reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cal-Maine Foods and Corsair Gaming

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

The idea behind Cal Maine Foods and Corsair Gaming 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 Transaction History module to view history of all your transactions and understand their impact on performance.