Correlation Between Cal Maine and UNIVERSAL DISPLAY

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

Diversification Opportunities for Cal Maine and UNIVERSAL DISPLAY

-0.81

Correlation Coefficient

Cal Maine  UNIVERSAL DISPLAY

Pay attention - limited upside

The 3 months correlation between Cal and UNIVERSAL is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and UNIVERSAL DISPLAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL DISPLAY 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 UNIVERSAL DISPLAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVERSAL DISPLAY has no effect on the direction of Cal Maine i.e., Cal Maine and UNIVERSAL DISPLAY go up and down completely randomly.

Pair Corralation between Cal Maine and UNIVERSAL DISPLAY

Assuming the 90 days trading horizon Cal Maine Foods is expected to generate 0.91 times more return on investment than UNIVERSAL DISPLAY. However, Cal Maine Foods is 1.1 times less risky than UNIVERSAL DISPLAY. It trades about 0.18 of its potential returns per unit of risk. UNIVERSAL DISPLAY is currently generating about -0.13 per unit of risk. If you would invest  8,086  in Cal Maine Foods on October 10, 2024 and sell it today you would earn a total of  1,900  from holding Cal Maine Foods or generate 23.5% return on investment over 90 days.

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

Cal Maine Foods  vs.  UNIVERSAL DISPLAY

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 uncertain basic indicators, Cal Maine unveiled solid returns over the last few months and may actually be approaching a breakup point.

UNIVERSAL DISPLAY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNIVERSAL DISPLAY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cal Maine and UNIVERSAL DISPLAY

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

The idea behind Cal Maine Foods and UNIVERSAL DISPLAY 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.