Correlation Between Cal Maine and CHINA CONBANK

Can any of the company-specific risk be diversified away by investing in both Cal Maine and CHINA CONBANK 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 CHINA CONBANK 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 CHINA BANK ADR20, you can compare the effects of market volatilities on Cal Maine and CHINA CONBANK 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 CHINA CONBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Maine and CHINA CONBANK.

Diversification Opportunities for Cal Maine and CHINA CONBANK

-0.53

Correlation Coefficient

Cal Maine  CHINA CONBANK

Excellent diversification

The 3 months correlation between Cal and CHINA is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and CHINA BANK ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA BANK ADR20 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 CHINA CONBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA BANK ADR20 has no effect on the direction of Cal Maine i.e., Cal Maine and CHINA CONBANK go up and down completely randomly.

Pair Corralation between Cal Maine and CHINA CONBANK

Assuming the 90 days trading horizon Cal Maine Foods is expected to under-perform the CHINA CONBANK. In addition to that, Cal Maine is 1.89 times more volatile than CHINA BANK ADR20. It trades about -0.07 of its total potential returns per unit of risk. CHINA BANK ADR20 is currently generating about 0.07 per unit of volatility. If you would invest  1,492  in CHINA BANK ADR20 on December 24, 2024 and sell it today you would earn a total of  98.00  from holding CHINA BANK ADR20 or generate 6.57% 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.  CHINA BANK ADR20

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CHINA BANK ADR20

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA BANK ADR20 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CHINA CONBANK may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cal Maine and CHINA CONBANK

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

The idea behind Cal Maine Foods and CHINA BANK ADR20 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.