Correlation Between Origin Agritech and Home Depot
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Home Depot 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 Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and The Home Depot, you can compare the effects of market volatilities on Origin Agritech and Home Depot 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 Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Home Depot.
Diversification Opportunities for Origin Agritech and Home Depot
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Origin and Home is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot 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 Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of Origin Agritech i.e., Origin Agritech and Home Depot go up and down completely randomly.
Pair Corralation between Origin Agritech and Home Depot
Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Home Depot. In addition to that, Origin Agritech is 2.84 times more volatile than The Home Depot. It trades about -0.13 of its total potential returns per unit of risk. The Home Depot is currently generating about 0.26 per unit of volatility. If you would invest 37,055 in The Home Depot on August 26, 2024 and sell it today you would earn a total of 3,020 from holding The Home Depot or generate 8.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Agritech vs. The Home Depot
Performance |
| Timeline |
| Origin Agritech |
| Home Depot |
Origin Agritech and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and Home Depot
The main advantage of trading using opposite Origin Agritech and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.| Origin Agritech vs. Mizuho Financial Group | Origin Agritech vs. Mitsui Chemicals | Origin Agritech vs. PT Bank Maybank | Origin Agritech vs. REVO INSURANCE SPA |
| Home Depot vs. WICKES GROUP PLC | Home Depot vs. Superior Plus Corp | Home Depot vs. NMI Holdings | Home Depot 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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