Correlation Between Origin Agritech and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Lockheed Martin 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 Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and Lockheed Martin, you can compare the effects of market volatilities on Origin Agritech and Lockheed Martin 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 Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Lockheed Martin.
Diversification Opportunities for Origin Agritech and Lockheed Martin
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Origin and Lockheed is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin 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 Lockheed Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lockheed Martin has no effect on the direction of Origin Agritech i.e., Origin Agritech and Lockheed Martin go up and down completely randomly.
Pair Corralation between Origin Agritech and Lockheed Martin
Assuming the 90 days trading horizon Origin Agritech is expected to generate 2.73 times more return on investment than Lockheed Martin. However, Origin Agritech is 2.73 times more volatile than Lockheed Martin. It trades about 0.05 of its potential returns per unit of risk. Lockheed Martin is currently generating about -0.27 per unit of risk. If you would invest 228.00 in Origin Agritech on September 14, 2024 and sell it today you would earn a total of 6.00 from holding Origin Agritech or generate 2.63% 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. Lockheed Martin
Performance |
| Timeline |
| Origin Agritech |
| Lockheed Martin |
Origin Agritech and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and Lockheed Martin
The main advantage of trading using opposite Origin Agritech and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Lockheed Martin 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 Lockheed Martin will offset losses from the drop in Lockheed Martin's long position.| Origin Agritech vs. ITALIAN WINE BRANDS | Origin Agritech vs. Treasury Wine Estates | Origin Agritech vs. UPDATE SOFTWARE | Origin Agritech vs. Aegean Airlines SA |
| Lockheed Martin vs. Airbus SE | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. Superior Plus Corp | Lockheed Martin 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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