Correlation Between Origin Agritech and Li Ning
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Li Ning 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 Li Ning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and Li Ning Company, you can compare the effects of market volatilities on Origin Agritech and Li Ning 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 Li Ning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Li Ning.
Diversification Opportunities for Origin Agritech and Li Ning
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Origin and LNLB is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Li Ning Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Ning Company 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 Li Ning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Ning Company has no effect on the direction of Origin Agritech i.e., Origin Agritech and Li Ning go up and down completely randomly.
Pair Corralation between Origin Agritech and Li Ning
Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Li Ning. In addition to that, Origin Agritech is 1.03 times more volatile than Li Ning Company. It trades about -0.08 of its total potential returns per unit of risk. Li Ning Company is currently generating about 0.05 per unit of volatility. If you would invest 165.00 in Li Ning Company on September 2, 2024 and sell it today you would earn a total of 27.00 from holding Li Ning Company or generate 16.36% 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. Li Ning Company
Performance |
| Timeline |
| Origin Agritech |
| Li Ning Company |
Origin Agritech and Li Ning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and Li Ning
The main advantage of trading using opposite Origin Agritech and Li Ning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Li Ning 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 Li Ning will offset losses from the drop in Li Ning's long position.| Origin Agritech vs. CENTURIA OFFICE REIT | Origin Agritech vs. Ryanair Holdings plc | Origin Agritech vs. KENEDIX OFFICE INV | Origin Agritech vs. MAVEN WIRELESS SWEDEN |
| Li Ning vs. Global Ship Lease | Li Ning vs. Perseus Mining Limited | Li Ning vs. Playtech plc | Li Ning vs. Uber Technologies |
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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