Correlation Between Origin Agritech and Seiko Epson
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Seiko Epson 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 Seiko Epson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and Seiko Epson, you can compare the effects of market volatilities on Origin Agritech and Seiko Epson 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 Seiko Epson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Seiko Epson.
Diversification Opportunities for Origin Agritech and Seiko Epson
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Origin and Seiko is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Seiko Epson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seiko Epson 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 Seiko Epson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seiko Epson has no effect on the direction of Origin Agritech i.e., Origin Agritech and Seiko Epson go up and down completely randomly.
Pair Corralation between Origin Agritech and Seiko Epson
Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Seiko Epson. In addition to that, Origin Agritech is 2.84 times more volatile than Seiko Epson. It trades about -0.04 of its total potential returns per unit of risk. Seiko Epson is currently generating about 0.05 per unit of volatility. If you would invest 1,640 in Seiko Epson on August 29, 2024 and sell it today you would earn a total of 20.00 from holding Seiko Epson or generate 1.22% 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. Seiko Epson
Performance |
| Timeline |
| Origin Agritech |
| Seiko Epson |
Origin Agritech and Seiko Epson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and Seiko Epson
The main advantage of trading using opposite Origin Agritech and Seiko Epson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Seiko Epson 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 Seiko Epson will offset losses from the drop in Seiko Epson's long position.| Origin Agritech vs. 24SEVENOFFICE GROUP AB | Origin Agritech vs. MAVEN WIRELESS SWEDEN | Origin Agritech vs. SIDETRADE EO 1 | Origin Agritech vs. HK Electric Investments |
| Seiko Epson vs. AGRICULTBK HADR25 YC | Seiko Epson vs. FAST RETAIL ADR | Seiko Epson vs. Hitachi Construction Machinery | Seiko Epson vs. FLOW TRADERS LTD |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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