Correlation Between Aluminumof China and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both Aluminumof China 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 Aluminumof China and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and Origin Agritech, you can compare the effects of market volatilities on Aluminumof China 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 Aluminumof China with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Origin Agritech.
Diversification Opportunities for Aluminumof China and Origin Agritech
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aluminumof and Origin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and Aluminumof China 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 Aluminum of 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 Aluminumof China i.e., Aluminumof China and Origin Agritech go up and down completely randomly.
Pair Corralation between Aluminumof China and Origin Agritech
Assuming the 90 days horizon Aluminum of is expected to generate 0.82 times more return on investment than Origin Agritech. However, Aluminum of is 1.22 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 0.06 per unit of risk. If you would invest 51.00 in Aluminum of on September 3, 2024 and sell it today you would earn a total of 4.00 from holding Aluminum of or generate 7.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. Origin Agritech
Performance |
| Timeline |
| Aluminumof China |
| Origin Agritech |
Aluminumof China and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and Origin Agritech
The main advantage of trading using opposite Aluminumof China and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China 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.| Aluminumof China vs. TITANIUM TRANSPORTGROUP | Aluminumof China vs. TSOGO SUN GAMING | Aluminumof China vs. Media and Games | Aluminumof China vs. UNIVMUSIC GRPADR050 |
| Origin Agritech vs. Gamma Communications plc | Origin Agritech vs. Chunghwa Telecom Co | Origin Agritech vs. Citic Telecom International | Origin Agritech vs. Ribbon Communications |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |