Correlation Between Japan Steel and Cal Maine

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

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

Diversification Opportunities for Japan Steel and Cal Maine

0.03

Correlation Coefficient

Japan Steel  Cal Maine

Significant diversification

The 3 months correlation between Japan and Cal is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding The Japan Steel 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 Japan Steel 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 The Japan Steel 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 Japan Steel i.e., Japan Steel and Cal Maine go up and down completely randomly.

Pair Corralation between Japan Steel and Cal Maine

Assuming the 90 days horizon The Japan Steel is expected to generate 1.25 times more return on investment than Cal Maine. However, Japan Steel is 1.25 times more volatile than Cal Maine Foods. It trades about 0.01 of its potential returns per unit of risk. Cal Maine Foods is currently generating about -0.07 per unit of risk. If you would invest  3,780  in The Japan Steel on December 23, 2024 and sell it today you would lose (60.00) from holding The Japan Steel or give up 1.59% of portfolio value over 90 days.

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

The Japan Steel  vs.  Cal Maine Foods

Japan Steel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Japan Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Japan Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 fragile 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.

Pair Trading with Japan Steel and Cal Maine

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