Correlation Between Origin Agritech and BP Plc
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and BP 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 BP 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 BP plc, you can compare the effects of market volatilities on Origin Agritech and BP 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 BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and BP Plc.
Diversification Opportunities for Origin Agritech and BP Plc
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Origin and BSU is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc 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 BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of Origin Agritech i.e., Origin Agritech and BP Plc go up and down completely randomly.
Pair Corralation between Origin Agritech and BP Plc
Assuming the 90 days trading horizon Origin Agritech is expected to generate 5.05 times more return on investment than BP Plc. However, Origin Agritech is 5.05 times more volatile than BP plc. It trades about 0.05 of its potential returns per unit of risk. BP plc is currently generating about -0.02 per unit of risk. If you would invest 179.00 in Origin Agritech on August 27, 2024 and sell it today you would earn a total of 55.00 from holding Origin Agritech or generate 30.73% 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. BP plc
Performance |
| Timeline |
| Origin Agritech |
| BP plc |
Origin Agritech and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and BP Plc
The main advantage of trading using opposite Origin Agritech and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, BP 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 BP Plc will offset losses from the drop in BP Plc's long position.| Origin Agritech vs. ECHO INVESTMENT ZY | Origin Agritech vs. Penn National Gaming | Origin Agritech vs. HOCHSCHILD MINING | Origin Agritech vs. Strategic Investments AS |
| BP Plc vs. Superior Plus Corp | BP Plc vs. Origin Agritech | BP Plc vs. Identiv | BP Plc vs. INTUITIVE SURGICAL |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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