Correlation Between Origin Agritech and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Wells Fargo 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 Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and West Fraser Timber, you can compare the effects of market volatilities on Origin Agritech and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Wells Fargo.
Diversification Opportunities for Origin Agritech and Wells Fargo
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Origin and Wells is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and West Fraser Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Fraser Timber 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Fraser Timber has no effect on the direction of Origin Agritech i.e., Origin Agritech and Wells Fargo go up and down completely randomly.
Pair Corralation between Origin Agritech and Wells Fargo
Assuming the 90 days trading horizon Origin Agritech is expected to generate 3.64 times more return on investment than Wells Fargo. However, Origin Agritech is 3.64 times more volatile than West Fraser Timber. It trades about 0.01 of its potential returns per unit of risk. West Fraser Timber is currently generating about 0.03 per unit of risk. If you would invest 368.00 in Origin Agritech on September 12, 2024 and sell it today you would lose (130.00) from holding Origin Agritech or give up 35.33% 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. West Fraser Timber
Performance |
| Timeline |
| Origin Agritech |
| West Fraser Timber |
Origin Agritech and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and Wells Fargo
The main advantage of trading using opposite Origin Agritech and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.| Origin Agritech vs. REINET INVESTMENTS SCA | Origin Agritech vs. AOYAMA TRADING | Origin Agritech vs. Japan Asia Investment | Origin Agritech vs. MAROC TELECOM |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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