Correlation Between Origin Agritech and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Eastman Chemical 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 Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and Eastman Chemical, you can compare the effects of market volatilities on Origin Agritech and Eastman Chemical 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 Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Eastman Chemical.
Diversification Opportunities for Origin Agritech and Eastman Chemical
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Origin and Eastman is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical 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 Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Origin Agritech i.e., Origin Agritech and Eastman Chemical go up and down completely randomly.
Pair Corralation between Origin Agritech and Eastman Chemical
Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Eastman Chemical. In addition to that, Origin Agritech is 2.03 times more volatile than Eastman Chemical. It trades about -0.04 of its total potential returns per unit of risk. Eastman Chemical is currently generating about 0.03 per unit of volatility. If you would invest 9,768 in Eastman Chemical on August 29, 2024 and sell it today you would earn a total of 84.00 from holding Eastman Chemical or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Agritech vs. Eastman Chemical
Performance |
| Timeline |
| Origin Agritech |
| Eastman Chemical |
Origin Agritech and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and Eastman Chemical
The main advantage of trading using opposite Origin Agritech and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| Origin Agritech vs. 24SEVENOFFICE GROUP AB | Origin Agritech vs. MAVEN WIRELESS SWEDEN | Origin Agritech vs. SIDETRADE EO 1 | Origin Agritech vs. HK Electric Investments |
| Eastman Chemical vs. Superior Plus Corp | Eastman Chemical vs. NMI Holdings | Eastman Chemical vs. Origin Agritech | Eastman Chemical vs. SIVERS SEMICONDUCTORS AB |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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