Correlation Between Cal Maine and TIANQI LITHIUM

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

Diversification Opportunities for Cal Maine and TIANQI LITHIUM

-0.3

Correlation Coefficient

Cal Maine  TIANQI LITHIUM

Very good diversification

The 3 months correlation between Cal and TIANQI is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and TIANQI LITHIUM H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIANQI LITHIUM H 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 TIANQI LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIANQI LITHIUM H has no effect on the direction of Cal Maine i.e., Cal Maine and TIANQI LITHIUM go up and down completely randomly.

Pair Corralation between Cal Maine and TIANQI LITHIUM

Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 0.77 times more return on investment than TIANQI LITHIUM. However, Cal Maine Foods is 1.29 times less risky than TIANQI LITHIUM. It trades about 0.12 of its potential returns per unit of risk. TIANQI LITHIUM H is currently generating about -0.08 per unit of risk. If you would invest  9,430  in Cal Maine Foods on October 10, 2024 and sell it today you would earn a total of  556.00  from holding Cal Maine Foods or generate 5.9% 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.  TIANQI LITHIUM H

Cal Maine Foods

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Maine Foods are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Cal Maine unveiled solid returns over the last few months and may actually be approaching a breakup point.

TIANQI LITHIUM H

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TIANQI LITHIUM H has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TIANQI LITHIUM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cal Maine and TIANQI LITHIUM

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

The idea behind Cal Maine Foods and TIANQI LITHIUM H 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.