Correlation Between Cal Maine and DATA MODUL

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

Diversification Opportunities for Cal Maine and DATA MODUL

0.1

Correlation Coefficient

Cal Maine  DATA MODUL

Average diversification

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

Pair Corralation between Cal Maine and DATA MODUL

Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 1.25 times more return on investment than DATA MODUL. However, Cal Maine is 1.25 times more volatile than DATA MODUL . It trades about 0.0 of its potential returns per unit of risk. DATA MODUL is currently generating about -0.07 per unit of risk. If you would invest  10,060  in Cal Maine Foods on October 12, 2024 and sell it today you would lose (74.00) from holding Cal Maine Foods or give up 0.74% of portfolio value over 90 days.

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

Cal Maine Foods  vs.  DATA MODUL

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.

DATA MODUL

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DATA MODUL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady primary indicators, DATA MODUL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cal Maine and DATA MODUL

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

The idea behind Cal Maine Foods and DATA MODUL 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..