Correlation Between Origin Agritech and Principal Financial
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Principal Financial 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 Principal Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and Principal Financial Group, you can compare the effects of market volatilities on Origin Agritech and Principal Financial 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 Principal Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Principal Financial.
Diversification Opportunities for Origin Agritech and Principal Financial
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Origin and Principal is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Principal Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Financial 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 Principal Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Financial has no effect on the direction of Origin Agritech i.e., Origin Agritech and Principal Financial go up and down completely randomly.
Pair Corralation between Origin Agritech and Principal Financial
Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Principal Financial. In addition to that, Origin Agritech is 2.82 times more volatile than Principal Financial Group. It trades about -0.07 of its total potential returns per unit of risk. Principal Financial Group is currently generating about 0.06 per unit of volatility. If you would invest 7,179 in Principal Financial Group on September 3, 2024 and sell it today you would earn a total of 1,021 from holding Principal Financial Group or generate 14.22% 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. Principal Financial Group
Performance |
| Timeline |
| Origin Agritech |
| Principal Financial |
Origin Agritech and Principal Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and Principal Financial
The main advantage of trading using opposite Origin Agritech and Principal Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Principal Financial 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 Principal Financial will offset losses from the drop in Principal Financial'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 |
| Principal Financial vs. Allianz SE | Principal Financial vs. Superior Plus Corp | Principal Financial vs. NMI Holdings | Principal Financial 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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