Correlation Between Chuangs China and Cal Maine
Can any of the company-specific risk be diversified away by investing in both Chuangs China and Cal Maine 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 Chuangs China and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chuangs China Investments and Cal Maine Foods, you can compare the effects of market volatilities on Chuangs China and Cal Maine 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 Chuangs China with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and Cal Maine.
Diversification Opportunities for Chuangs China and Cal Maine
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chuangs and Cal is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and Cal Maine Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Maine Foods and Chuangs China 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 Chuangs China Investments are associated (or correlated) with Cal Maine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Maine Foods has no effect on the direction of Chuangs China i.e., Chuangs China and Cal Maine go up and down completely randomly.
Pair Corralation between Chuangs China and Cal Maine
Assuming the 90 days horizon Chuangs China is expected to generate 210.49 times less return on investment than Cal Maine. But when comparing it to its historical volatility, Chuangs China Investments is 2.44 times less risky than Cal Maine. It trades about 0.0 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 6,306 in Cal Maine Foods on September 18, 2024 and sell it today you would earn a total of 3,914 from holding Cal Maine Foods or generate 62.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Chuangs China Investments vs. Cal Maine Foods
Performance |
Timeline |
Chuangs China Investments |
Cal Maine Foods |
Chuangs China and Cal Maine Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chuangs China and Cal Maine
The main advantage of trading using opposite Chuangs China and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, Cal Maine 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 Cal Maine will offset losses from the drop in Cal Maine's long position.Chuangs China vs. Superior Plus Corp | ||
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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