Correlation Between Origin Agritech and PowerHouse Energy
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and PowerHouse Energy 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 PowerHouse Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and PowerHouse Energy Group, you can compare the effects of market volatilities on Origin Agritech and PowerHouse Energy 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 PowerHouse Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and PowerHouse Energy.
Diversification Opportunities for Origin Agritech and PowerHouse Energy
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Origin and PowerHouse is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and PowerHouse Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerHouse Energy 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 PowerHouse Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerHouse Energy has no effect on the direction of Origin Agritech i.e., Origin Agritech and PowerHouse Energy go up and down completely randomly.
Pair Corralation between Origin Agritech and PowerHouse Energy
Assuming the 90 days trading horizon Origin Agritech is expected to generate 1.27 times more return on investment than PowerHouse Energy. However, Origin Agritech is 1.27 times more volatile than PowerHouse Energy Group. It trades about -0.04 of its potential returns per unit of risk. PowerHouse Energy Group is currently generating about -0.09 per unit of risk. If you would invest 246.00 in Origin Agritech on August 27, 2024 and sell it today you would lose (12.00) from holding Origin Agritech or give up 4.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Agritech vs. PowerHouse Energy Group
Performance |
| Timeline |
| Origin Agritech |
| PowerHouse Energy |
Origin Agritech and PowerHouse Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and PowerHouse Energy
The main advantage of trading using opposite Origin Agritech and PowerHouse Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, PowerHouse Energy 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 PowerHouse Energy will offset losses from the drop in PowerHouse Energy's long position.| Origin Agritech vs. Apple Inc | Origin Agritech vs. Apple Inc | Origin Agritech vs. Apple Inc | Origin Agritech vs. Apple Inc |
| PowerHouse Energy vs. VERBUND AG ADR | PowerHouse Energy vs. BEIJJINGNENG CLERGHYC1 | PowerHouse Energy vs. Superior Plus Corp | PowerHouse Energy 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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