Correlation Between Origin Agritech and Beijing MediaLimited
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Beijing MediaLimited 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 Beijing MediaLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and Beijing Media, you can compare the effects of market volatilities on Origin Agritech and Beijing MediaLimited 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 Beijing MediaLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Beijing MediaLimited.
Diversification Opportunities for Origin Agritech and Beijing MediaLimited
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Origin and Beijing is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Beijing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing MediaLimited 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 Beijing MediaLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing MediaLimited has no effect on the direction of Origin Agritech i.e., Origin Agritech and Beijing MediaLimited go up and down completely randomly.
Pair Corralation between Origin Agritech and Beijing MediaLimited
Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Beijing MediaLimited. In addition to that, Origin Agritech is 1.05 times more volatile than Beijing Media. It trades about -0.02 of its total potential returns per unit of risk. Beijing Media is currently generating about 0.01 per unit of volatility. If you would invest 6.20 in Beijing Media on August 24, 2024 and sell it today you would lose (2.45) from holding Beijing Media or give up 39.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Agritech vs. Beijing Media
Performance |
| Timeline |
| Origin Agritech |
| Beijing MediaLimited |
Origin Agritech and Beijing MediaLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and Beijing MediaLimited
The main advantage of trading using opposite Origin Agritech and Beijing MediaLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Beijing MediaLimited 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 Beijing MediaLimited will offset losses from the drop in Beijing MediaLimited's long position.| Origin Agritech vs. Origin Energy Limited | Origin Agritech vs. Origin Energy Limited | Origin Agritech vs. Origin Energy Limited | Origin Agritech vs. Origin Enterprises plc |
| Beijing MediaLimited vs. The Interpublic Group | Beijing MediaLimited vs. Superior Plus Corp | Beijing MediaLimited vs. NMI Holdings | Beijing MediaLimited vs. Origin Agritech |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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