Correlation Between Origin Agritech and American Lithium
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and American Lithium 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 American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and American Lithium Corp, you can compare the effects of market volatilities on Origin Agritech and American Lithium 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 American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and American Lithium.
Diversification Opportunities for Origin Agritech and American Lithium
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Origin and American is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp 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 American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Origin Agritech i.e., Origin Agritech and American Lithium go up and down completely randomly.
Pair Corralation between Origin Agritech and American Lithium
Assuming the 90 days trading horizon Origin Agritech is expected to generate 1.03 times more return on investment than American Lithium. However, Origin Agritech is 1.03 times more volatile than American Lithium Corp. It trades about 0.07 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.05 per unit of risk. If you would invest 242.00 in Origin Agritech on August 31, 2024 and sell it today you would earn a total of 14.00 from holding Origin Agritech or generate 5.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Agritech vs. American Lithium Corp
Performance |
| Timeline |
| Origin Agritech |
| American Lithium Corp |
Origin Agritech and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and American Lithium
The main advantage of trading using opposite Origin Agritech and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, American Lithium 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 American Lithium will offset losses from the drop in American Lithium's long position.| Origin Agritech vs. FORMPIPE SOFTWARE AB | Origin Agritech vs. PTT Global Chemical | Origin Agritech vs. Magic Software Enterprises | Origin Agritech vs. UPDATE SOFTWARE |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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