Correlation Between BII Railway and CAL MAINE

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

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

Diversification Opportunities for BII Railway and CAL MAINE

0.28

Correlation Coefficient

BII Railway  CAL MAINE

Modest diversification

The 3 months correlation between BII and CAL is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation 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 BII Railway 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 BII Railway Transportation 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 BII Railway i.e., BII Railway and CAL MAINE go up and down completely randomly.

Pair Corralation between BII Railway and CAL MAINE

Assuming the 90 days horizon BII Railway Transportation is expected to under-perform the CAL MAINE. But the stock apears to be less risky and, when comparing its historical volatility, BII Railway Transportation is 1.48 times less risky than CAL MAINE. The stock trades about 0.0 of its potential returns per unit of risk. The CAL MAINE FOODS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,322  in CAL MAINE FOODS on March 26, 2025 and sell it today you would earn a total of  464.00  from holding CAL MAINE FOODS or generate 5.58% return on investment over 90 days.

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

BII Railway Transportation  vs.  CAL MAINE FOODS

BII Railway Transpor

Risk-Adjusted Performance

Very Weak

Over the last 90 days BII Railway Transportation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BII Railway is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

CAL MAINE FOODS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CAL MAINE FOODS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CAL MAINE may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with BII Railway and CAL MAINE

The main advantage of trading using opposite BII Railway and CAL MAINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway 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 BII Railway Transportation 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.