Correlation Between National Beverage and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both National Beverage and Origin Agritech 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 National Beverage and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Origin Agritech, you can compare the effects of market volatilities on National Beverage and Origin Agritech 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 National Beverage with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Origin Agritech.
Diversification Opportunities for National Beverage and Origin Agritech
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Origin is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and National Beverage 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 National Beverage Corp are associated (or correlated) with Origin Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Agritech has no effect on the direction of National Beverage i.e., National Beverage and Origin Agritech go up and down completely randomly.
Pair Corralation between National Beverage and Origin Agritech
Assuming the 90 days horizon National Beverage Corp is expected to generate 0.46 times more return on investment than Origin Agritech. However, National Beverage Corp is 2.17 times less risky than Origin Agritech. It trades about 0.2 of its potential returns per unit of risk. Origin Agritech is currently generating about -0.04 per unit of risk. If you would invest 4,180 in National Beverage Corp on August 28, 2024 and sell it today you would earn a total of 320.00 from holding National Beverage Corp or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Origin Agritech
Performance |
| Timeline |
| National Beverage Corp |
| Origin Agritech |
National Beverage and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Origin Agritech
The main advantage of trading using opposite National Beverage and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Origin Agritech 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 Origin Agritech will offset losses from the drop in Origin Agritech's long position.| National Beverage vs. FIREWEED METALS P | National Beverage vs. Kaiser Aluminum | National Beverage vs. PennyMac Mortgage Investment | National Beverage vs. Chuangs China Investments |
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Check out your portfolio center.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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