Correlation Between Cal Maine and PLAY2CHILL

Can any of the company-specific risk be diversified away by investing in both Cal Maine and PLAY2CHILL 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 PLAY2CHILL 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 PLAY2CHILL SA ZY, you can compare the effects of market volatilities on Cal Maine and PLAY2CHILL 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 PLAY2CHILL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and PLAY2CHILL.

Diversification Opportunities for Cal Maine and PLAY2CHILL

0.1

Correlation Coefficient

Cal Maine  PLAY2CHILL

Average diversification

The 3 months correlation between Cal and PLAY2CHILL is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and PLAY2CHILL SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAY2CHILL SA ZY 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 PLAY2CHILL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAY2CHILL SA ZY has no effect on the direction of Cal Maine i.e., Cal Maine and PLAY2CHILL go up and down completely randomly.

Pair Corralation between Cal Maine and PLAY2CHILL

Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 2.33 times more return on investment than PLAY2CHILL. However, Cal Maine is 2.33 times more volatile than PLAY2CHILL SA ZY. It trades about 0.22 of its potential returns per unit of risk. PLAY2CHILL SA ZY is currently generating about 0.26 per unit of risk. If you would invest  9,986  in Cal Maine Foods on October 21, 2024 and sell it today you would earn a total of  1,179  from holding Cal Maine Foods or generate 11.81% return on investment over 90 days.

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

Cal Maine Foods  vs.  PLAY2CHILL SA ZY

Cal Maine Foods

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Maine Foods are ranked lower than 16 (%) 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.

PLAY2CHILL SA ZY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAY2CHILL SA ZY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PLAY2CHILL 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 PLAY2CHILL

The main advantage of trading using opposite Cal Maine and PLAY2CHILL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Maine position performs unexpectedly, PLAY2CHILL 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 PLAY2CHILL will offset losses from the drop in PLAY2CHILL's long position.

The idea behind Cal Maine Foods and PLAY2CHILL SA ZY 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.