Correlation Between Origin Agritech and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and CHINA HUARONG 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 CHINA HUARONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on Origin Agritech and CHINA HUARONG 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 CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and CHINA HUARONG.
Diversification Opportunities for Origin Agritech and CHINA HUARONG
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Origin and CHINA is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and CHINA HUARONG ENERHD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA HUARONG ENERHD 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 CHINA HUARONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA HUARONG ENERHD has no effect on the direction of Origin Agritech i.e., Origin Agritech and CHINA HUARONG go up and down completely randomly.
Pair Corralation between Origin Agritech and CHINA HUARONG
Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the CHINA HUARONG. But the stock apears to be less risky and, when comparing its historical volatility, Origin Agritech is 4.62 times less risky than CHINA HUARONG. The stock trades about -0.01 of its potential returns per unit of risk. The CHINA HUARONG ENERHD 50 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.10 in CHINA HUARONG ENERHD 50 on November 3, 2024 and sell it today you would earn a total of 0.00 from holding CHINA HUARONG ENERHD 50 or generate 0.0% 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. CHINA HUARONG ENERHD 50
Performance |
| Timeline |
| Origin Agritech |
| CHINA HUARONG ENERHD |
Origin Agritech and CHINA HUARONG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and CHINA HUARONG
The main advantage of trading using opposite Origin Agritech and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, CHINA HUARONG 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 CHINA HUARONG will offset losses from the drop in CHINA HUARONG's long position.| Origin Agritech vs. Sekisui Chemical Co | Origin Agritech vs. BOS BETTER ONLINE | Origin Agritech vs. Shin Etsu Chemical Co | Origin Agritech vs. YATRA ONLINE DL 0001 |
| CHINA HUARONG vs. Citic Telecom International | CHINA HUARONG vs. Telecom Argentina SA | CHINA HUARONG vs. Spirent Communications plc | CHINA HUARONG vs. COMBA TELECOM SYST |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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