Correlation Between CAL MAINE and Fast Retailing

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

Diversification Opportunities for CAL MAINE and Fast Retailing

-0.48

Correlation Coefficient

CAL MAINE  Fast Retailing

Very good diversification

The 3 months correlation between CAL and Fast is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of CAL MAINE i.e., CAL MAINE and Fast Retailing go up and down completely randomly.

Pair Corralation between CAL MAINE and Fast Retailing

Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 1.0 times more return on investment than Fast Retailing. However, CAL MAINE FOODS is 1.0 times less risky than Fast Retailing. It trades about 0.13 of its potential returns per unit of risk. Fast Retailing Co is currently generating about -0.08 per unit of risk. If you would invest  7,908  in CAL MAINE FOODS on April 23, 2025 and sell it today you would earn a total of  1,144  from holding CAL MAINE FOODS or generate 14.47% return on investment over 90 days.

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

CAL MAINE FOODS  vs.  Fast Retailing Co

CAL MAINE FOODS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CAL MAINE FOODS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, CAL MAINE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fast Retailing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fast Retailing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CAL MAINE and Fast Retailing

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

The idea behind CAL MAINE FOODS and Fast Retailing Co 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.