Correlation Between Origin Agritech and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Southwest Airlines 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 Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and Southwest Airlines Co, you can compare the effects of market volatilities on Origin Agritech and Southwest Airlines 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 Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Southwest Airlines.
Diversification Opportunities for Origin Agritech and Southwest Airlines
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Origin and Southwest is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines 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 Southwest Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwest Airlines has no effect on the direction of Origin Agritech i.e., Origin Agritech and Southwest Airlines go up and down completely randomly.
Pair Corralation between Origin Agritech and Southwest Airlines
Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Southwest Airlines. In addition to that, Origin Agritech is 1.84 times more volatile than Southwest Airlines Co. It trades about -0.04 of its total potential returns per unit of risk. Southwest Airlines Co is currently generating about 0.27 per unit of volatility. If you would invest 2,724 in Southwest Airlines Co on August 29, 2024 and sell it today you would earn a total of 355.00 from holding Southwest Airlines Co or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Origin Agritech vs. Southwest Airlines Co
Performance |
| Timeline |
| Origin Agritech |
| Southwest Airlines |
Origin Agritech and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and Southwest Airlines
The main advantage of trading using opposite Origin Agritech and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Southwest Airlines 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 Southwest Airlines will offset losses from the drop in Southwest Airlines' long position.| Origin Agritech vs. Playtech plc | Origin Agritech vs. AAC TECHNOLOGHLDGADR | Origin Agritech vs. SCANDMEDICAL SOLDK 040 | Origin Agritech vs. ONWARD MEDICAL BV |
| Southwest Airlines vs. RYANAIR HLDGS ADR | Southwest Airlines vs. Ryanair Holdings plc | Southwest Airlines vs. Superior Plus Corp | Southwest Airlines vs. NMI Holdings |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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