Correlation Between AEON STORES and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both AEON STORES 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 AEON STORES and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEON STORES and Origin Agritech, you can compare the effects of market volatilities on AEON STORES 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 AEON STORES with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEON STORES and Origin Agritech.
Diversification Opportunities for AEON STORES and Origin Agritech
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AEON and Origin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding AEON STORES and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and AEON STORES 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 AEON STORES 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 AEON STORES i.e., AEON STORES and Origin Agritech go up and down completely randomly.
Pair Corralation between AEON STORES and Origin Agritech
Assuming the 90 days trading horizon AEON STORES is expected to generate 0.25 times more return on investment than Origin Agritech. However, AEON STORES is 4.06 times less risky than Origin Agritech. It trades about -0.04 of its potential returns per unit of risk. Origin Agritech is currently generating about -0.07 per unit of risk. If you would invest 6.05 in AEON STORES on November 4, 2024 and sell it today you would lose (0.15) from holding AEON STORES or give up 2.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AEON STORES vs. Origin Agritech
Performance |
| Timeline |
| AEON STORES |
| Origin Agritech |
AEON STORES and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEON STORES and Origin Agritech
The main advantage of trading using opposite AEON STORES and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEON STORES 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.| AEON STORES vs. SCOTT TECHNOLOGY | AEON STORES vs. PKSHA TECHNOLOGY INC | AEON STORES vs. X FAB Silicon Foundries | AEON STORES vs. Easy Software AG |
| Origin Agritech vs. Kingdee International Software | Origin Agritech vs. Take Two Interactive Software | Origin Agritech vs. Gol Intelligent Airlines | Origin Agritech vs. AEGEAN AIRLINES |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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