Correlation Between Origin Agritech and BGF Euro
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and BGF Euro 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 BGF Euro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and BGF Euro Markets, you can compare the effects of market volatilities on Origin Agritech and BGF Euro 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 BGF Euro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and BGF Euro.
Diversification Opportunities for Origin Agritech and BGF Euro
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Origin and BGF is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and BGF Euro Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Euro Markets 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 BGF Euro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Euro Markets has no effect on the direction of Origin Agritech i.e., Origin Agritech and BGF Euro go up and down completely randomly.
Pair Corralation between Origin Agritech and BGF Euro
Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the BGF Euro. In addition to that, Origin Agritech is 5.75 times more volatile than BGF Euro Markets. It trades about -0.01 of its total potential returns per unit of risk. BGF Euro Markets is currently generating about 0.01 per unit of volatility. If you would invest 4,275 in BGF Euro Markets on September 3, 2024 and sell it today you would earn a total of 62.00 from holding BGF Euro Markets or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 40.2% |
| Values | Daily Returns |
Origin Agritech vs. BGF Euro Markets
Performance |
| Timeline |
| Origin Agritech |
| BGF Euro Markets |
Origin Agritech and BGF Euro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and BGF Euro
The main advantage of trading using opposite Origin Agritech and BGF Euro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, BGF Euro 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 BGF Euro will offset losses from the drop in BGF Euro'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 |
| BGF Euro vs. Groupama Entreprises N | BGF Euro vs. Renaissance Europe C | BGF Euro vs. Superior Plus Corp | BGF Euro 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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