Correlation Between Origin Agritech and Star Diamond
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Star Diamond 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 Star Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and Star Diamond, you can compare the effects of market volatilities on Origin Agritech and Star Diamond 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 Star Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Star Diamond.
Diversification Opportunities for Origin Agritech and Star Diamond
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Origin and Star is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Star Diamond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Diamond 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 Star Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Diamond has no effect on the direction of Origin Agritech i.e., Origin Agritech and Star Diamond go up and down completely randomly.
Pair Corralation between Origin Agritech and Star Diamond
Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Star Diamond. But the stock apears to be less risky and, when comparing its historical volatility, Origin Agritech is 1.46 times less risky than Star Diamond. The stock trades about -0.01 of its potential returns per unit of risk. The Star Diamond is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 7.40 in Star Diamond on August 31, 2024 and sell it today you would lose (6.35) from holding Star Diamond or give up 85.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Agritech vs. Star Diamond
Performance |
| Timeline |
| Origin Agritech |
| Star Diamond |
Origin Agritech and Star Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and Star Diamond
The main advantage of trading using opposite Origin Agritech and Star Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Star Diamond 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 Star Diamond will offset losses from the drop in Star Diamond's long position.| Origin Agritech vs. FORMPIPE SOFTWARE AB | Origin Agritech vs. PTT Global Chemical | Origin Agritech vs. Magic Software Enterprises | Origin Agritech vs. UPDATE SOFTWARE |
| Star Diamond vs. InterContinental Hotels Group | Star Diamond vs. Virtus Investment Partners | Star Diamond vs. WILLIS LEASE FIN | Star Diamond vs. MELIA HOTELS |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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