Correlation Between Cal Maine and Aluminumof China

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

Diversification Opportunities for Cal Maine and Aluminumof China

-0.18

Correlation Coefficient

Cal Maine  Aluminumof China

Good diversification

The 3 months correlation between Cal and Aluminumof is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China 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 Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of Cal Maine i.e., Cal Maine and Aluminumof China go up and down completely randomly.

Pair Corralation between Cal Maine and Aluminumof China

Assuming the 90 days trading horizon Cal Maine Foods is expected to under-perform the Aluminumof China. In addition to that, Cal Maine is 1.17 times more volatile than Aluminum of. It trades about -0.04 of its total potential returns per unit of risk. Aluminum of is currently generating about 0.06 per unit of volatility. If you would invest  55.00  in Aluminum of on December 27, 2024 and sell it today you would earn a total of  5.00  from holding Aluminum of or generate 9.09% 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.  Aluminum of

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. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Aluminumof China

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aluminum of are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Aluminumof China may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cal Maine and Aluminumof China

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

The idea behind Cal Maine Foods and Aluminum of 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 CEOs Directory module to screen CEOs from public companies around the world.