Correlation Between DBS Group and Cal Maine

Can any of the company-specific risk be diversified away by investing in both DBS Group 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 DBS Group and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DBS Group Holdings and Cal Maine Foods, you can compare the effects of market volatilities on DBS Group 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 DBS Group with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBS Group and Cal Maine.

Diversification Opportunities for DBS Group and Cal Maine

0.84

Correlation Coefficient

DBS Group  Cal Maine

Very poor diversification

The 3 months correlation between DBS and Cal is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding DBS Group Holdings 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 DBS Group 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 DBS Group Holdings 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 DBS Group i.e., DBS Group and Cal Maine go up and down completely randomly.

Pair Corralation between DBS Group and Cal Maine

Assuming the 90 days trading horizon DBS Group is expected to generate 1.96 times less return on investment than Cal Maine. But when comparing it to its historical volatility, DBS Group Holdings is 1.56 times less risky than Cal Maine. It trades about 0.16 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  8,159  in Cal Maine Foods on October 25, 2024 and sell it today you would earn a total of  2,566  from holding Cal Maine Foods or generate 31.45% return on investment over 90 days.

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

DBS Group Holdings  vs.  Cal Maine Foods

DBS Group Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DBS Group Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, DBS Group reported solid returns over the last few months and may actually be approaching a breakup point.

Cal Maine Foods

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Maine Foods are ranked lower than 15 (%) 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.

Pair Trading with DBS Group and Cal Maine

The main advantage of trading using opposite DBS Group and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBS Group 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.

The idea behind DBS Group Holdings and Cal Maine Foods 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.