Correlation Between Origin Agritech and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Eagle Materials 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 Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and Eagle Materials, you can compare the effects of market volatilities on Origin Agritech and Eagle Materials 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 Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Eagle Materials.
Diversification Opportunities for Origin Agritech and Eagle Materials
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Origin and Eagle is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials 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 Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of Origin Agritech i.e., Origin Agritech and Eagle Materials go up and down completely randomly.
Pair Corralation between Origin Agritech and Eagle Materials
Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Eagle Materials. In addition to that, Origin Agritech is 2.53 times more volatile than Eagle Materials. It trades about -0.02 of its total potential returns per unit of risk. Eagle Materials is currently generating about 0.16 per unit of volatility. If you would invest 26,000 in Eagle Materials on August 30, 2024 and sell it today you would earn a total of 3,400 from holding Eagle Materials or generate 13.08% 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. Eagle Materials
Performance |
| Timeline |
| Origin Agritech |
| Eagle Materials |
Origin Agritech and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and Eagle Materials
The main advantage of trading using opposite Origin Agritech and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Eagle Materials 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 Eagle Materials will offset losses from the drop in Eagle Materials' long position.| Origin Agritech vs. OAKTRSPECLENDNEW | Origin Agritech vs. Jacquet Metal Service | Origin Agritech vs. MCEWEN MINING INC | Origin Agritech vs. URBAN OUTFITTERS |
| Eagle Materials vs. Daikin IndustriesLtd | Eagle Materials vs. Anhui Conch Cement | Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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