Correlation Between Origin Agritech and WPP PLC
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and WPP PLC 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 Origin Agritech and WPP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and WPP PLC ADR, you can compare the effects of market volatilities on Origin Agritech and WPP PLC 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 Origin Agritech with a short position of WPP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and WPP PLC.
Diversification Opportunities for Origin Agritech and WPP PLC
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Origin and WPP is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and WPP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP PLC ADR and Origin Agritech 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 Origin Agritech are associated (or correlated) with WPP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPP PLC ADR has no effect on the direction of Origin Agritech i.e., Origin Agritech and WPP PLC go up and down completely randomly.
Pair Corralation between Origin Agritech and WPP PLC
Assuming the 90 days trading horizon Origin Agritech is expected to generate 2.03 times less return on investment than WPP PLC. In addition to that, Origin Agritech is 2.91 times more volatile than WPP PLC ADR. It trades about 0.03 of its total potential returns per unit of risk. WPP PLC ADR is currently generating about 0.18 per unit of volatility. If you would invest 4,192 in WPP PLC ADR on September 2, 2024 and sell it today you would earn a total of 858.00 from holding WPP PLC ADR or generate 20.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Agritech vs. WPP PLC ADR
Performance |
| Timeline |
| Origin Agritech |
| WPP PLC ADR |
Origin Agritech and WPP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and WPP PLC
The main advantage of trading using opposite Origin Agritech and WPP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, WPP PLC 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 WPP PLC will offset losses from the drop in WPP PLC's long position.| Origin Agritech vs. CENTURIA OFFICE REIT | Origin Agritech vs. Ryanair Holdings plc | Origin Agritech vs. KENEDIX OFFICE INV | Origin Agritech vs. MAVEN WIRELESS SWEDEN |
| WPP PLC vs. Richardson Electronics | WPP PLC vs. SCANDMEDICAL SOLDK 040 | WPP PLC vs. ARROW ELECTRONICS | WPP PLC vs. SAFETY MEDICAL PROD |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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