Correlation Between Origin Agritech and Dollar Tree
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Dollar Tree 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 Dollar Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and Dollar Tree, you can compare the effects of market volatilities on Origin Agritech and Dollar Tree 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 Dollar Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Dollar Tree.
Diversification Opportunities for Origin Agritech and Dollar Tree
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Origin and Dollar is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Dollar Tree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar Tree 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 Dollar Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar Tree has no effect on the direction of Origin Agritech i.e., Origin Agritech and Dollar Tree go up and down completely randomly.
Pair Corralation between Origin Agritech and Dollar Tree
Assuming the 90 days trading horizon Origin Agritech is expected to generate 1.33 times less return on investment than Dollar Tree. In addition to that, Origin Agritech is 1.55 times more volatile than Dollar Tree. It trades about 0.06 of its total potential returns per unit of risk. Dollar Tree is currently generating about 0.13 per unit of volatility. If you would invest 6,247 in Dollar Tree on September 3, 2024 and sell it today you would earn a total of 516.00 from holding Dollar Tree or generate 8.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Agritech vs. Dollar Tree
Performance |
| Timeline |
| Origin Agritech |
| Dollar Tree |
Origin Agritech and Dollar Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and Dollar Tree
The main advantage of trading using opposite Origin Agritech and Dollar Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Dollar Tree 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 Dollar Tree will offset losses from the drop in Dollar Tree's long position.| Origin Agritech vs. Gamma Communications plc | Origin Agritech vs. Chunghwa Telecom Co | Origin Agritech vs. Citic Telecom International | Origin Agritech vs. Ribbon Communications |
| Dollar Tree vs. Walmart | Dollar Tree vs. Superior Plus Corp | Dollar Tree vs. NMI Holdings | Dollar Tree 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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