Correlation Between Origin Agritech and Penta-Ocean Construction
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Penta-Ocean Construction 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 Penta-Ocean Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and Penta Ocean Construction Co, you can compare the effects of market volatilities on Origin Agritech and Penta-Ocean Construction 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 Penta-Ocean Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Penta-Ocean Construction.
Diversification Opportunities for Origin Agritech and Penta-Ocean Construction
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Origin and Penta-Ocean is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Penta Ocean Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penta-Ocean Construction 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 Penta-Ocean Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penta-Ocean Construction has no effect on the direction of Origin Agritech i.e., Origin Agritech and Penta-Ocean Construction go up and down completely randomly.
Pair Corralation between Origin Agritech and Penta-Ocean Construction
Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Penta-Ocean Construction. In addition to that, Origin Agritech is 3.79 times more volatile than Penta Ocean Construction Co. It trades about -0.01 of its total potential returns per unit of risk. Penta Ocean Construction Co is currently generating about -0.01 per unit of volatility. If you would invest 422.00 in Penta Ocean Construction Co on September 3, 2024 and sell it today you would lose (46.00) from holding Penta Ocean Construction Co or give up 10.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Agritech vs. Penta Ocean Construction Co
Performance |
| Timeline |
| Origin Agritech |
| Penta-Ocean Construction |
Origin Agritech and Penta-Ocean Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and Penta-Ocean Construction
The main advantage of trading using opposite Origin Agritech and Penta-Ocean Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Penta-Ocean Construction 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 Penta-Ocean Construction will offset losses from the drop in Penta-Ocean Construction'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 |
| Penta-Ocean Construction vs. Transurban Group | Penta-Ocean Construction vs. Superior Plus Corp | Penta-Ocean Construction vs. NMI Holdings | Penta-Ocean Construction 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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