Correlation Between Franco Nevada and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both Franco Nevada and Origin Agritech 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 Franco Nevada and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franco Nevada and Origin Agritech, you can compare the effects of market volatilities on Franco Nevada and Origin Agritech 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 Franco Nevada with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and Origin Agritech.
Diversification Opportunities for Franco Nevada and Origin Agritech
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franco and Origin is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and Franco Nevada 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 Franco Nevada are associated (or correlated) with Origin Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Agritech has no effect on the direction of Franco Nevada i.e., Franco Nevada and Origin Agritech go up and down completely randomly.
Pair Corralation between Franco Nevada and Origin Agritech
Assuming the 90 days horizon Franco Nevada is expected to generate 0.36 times more return on investment than Origin Agritech. However, Franco Nevada is 2.75 times less risky than Origin Agritech. It trades about 0.1 of its potential returns per unit of risk. Origin Agritech is currently generating about -0.11 per unit of risk. If you would invest 12,268 in Franco Nevada on January 18, 2025 and sell it today you would earn a total of 2,737 from holding Franco Nevada or generate 22.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franco Nevada vs. Origin Agritech
Performance |
| Timeline |
| Franco Nevada |
| Origin Agritech |
Franco Nevada and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franco Nevada and Origin Agritech
The main advantage of trading using opposite Franco Nevada and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada position performs unexpectedly, Origin Agritech 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 Origin Agritech will offset losses from the drop in Origin Agritech's long position.| Franco Nevada vs. SAFEROADS HLDGS | Franco Nevada vs. Kaufman Broad SA | Franco Nevada vs. COPLAND ROAD CAPITAL | Franco Nevada vs. MAGNUM MINING EXP |
| Origin Agritech vs. GOLDQUEST MINING | Origin Agritech vs. DISTRICT METALS | Origin Agritech vs. Neinor Homes SA | Origin Agritech vs. ARDAGH METAL PACDL 0001 |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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