Correlation Between Origin Agritech and BW LPG
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and BW LPG 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 BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and BW LPG Limited, you can compare the effects of market volatilities on Origin Agritech and BW LPG 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 BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and BW LPG.
Diversification Opportunities for Origin Agritech and BW LPG
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Origin and BW9 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and BW LPG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW LPG Limited 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 BW LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW LPG Limited has no effect on the direction of Origin Agritech i.e., Origin Agritech and BW LPG go up and down completely randomly.
Pair Corralation between Origin Agritech and BW LPG
Assuming the 90 days trading horizon Origin Agritech is expected to generate 1.78 times more return on investment than BW LPG. However, Origin Agritech is 1.78 times more volatile than BW LPG Limited. It trades about 0.05 of its potential returns per unit of risk. BW LPG Limited is currently generating about -0.09 per unit of risk. If you would invest 220.00 in Origin Agritech on September 12, 2024 and sell it today you would earn a total of 16.00 from holding Origin Agritech or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Origin Agritech vs. BW LPG Limited
Performance |
| Timeline |
| Origin Agritech |
| BW LPG Limited |
Origin Agritech and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and BW LPG
The main advantage of trading using opposite Origin Agritech and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, BW LPG 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 BW LPG will offset losses from the drop in BW LPG's long position.| Origin Agritech vs. MHP Hotel AG | Origin Agritech vs. G8 EDUCATION | Origin Agritech vs. STRAYER EDUCATION | Origin Agritech vs. DEVRY EDUCATION GRP |
| BW LPG vs. Xenia Hotels Resorts | BW LPG vs. PennantPark Investment | BW LPG vs. Postal Savings Bank | BW LPG vs. MHP Hotel AG |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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