Correlation Between GPT and CAL MAINE

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

By analyzing existing cross correlation between GPT Group and CAL MAINE FOODS, you can compare the effects of market volatilities on GPT 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 GPT with a short position of CAL MAINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GPT and CAL MAINE.

Diversification Opportunities for GPT and CAL MAINE

0.68

Correlation Coefficient

GPT  CAL MAINE

Poor diversification

The 3 months correlation between GPT and CAL is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding GPT Group 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 GPT 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 GPT Group 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 GPT i.e., GPT and CAL MAINE go up and down completely randomly.

Pair Corralation between GPT and CAL MAINE

Assuming the 90 days horizon GPT is expected to generate 1.1 times less return on investment than CAL MAINE. In addition to that, GPT is 1.18 times more volatile than CAL MAINE FOODS. It trades about 0.14 of its total potential returns per unit of risk. CAL MAINE FOODS is currently generating about 0.18 per unit of volatility. If you would invest  7,465  in CAL MAINE FOODS on April 22, 2025 and sell it today you would earn a total of  1,681  from holding CAL MAINE FOODS or generate 22.52% return on investment over 90 days.

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

GPT Group  vs.  CAL MAINE FOODS

GPT Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GPT Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GPT reported solid returns over the last few months and may actually be approaching a breakup point.

CAL MAINE FOODS

Risk-Adjusted Performance

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 rather fragile basic indicators, CAL MAINE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GPT and CAL MAINE

The main advantage of trading using opposite GPT and CAL MAINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GPT 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 GPT Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.