Correlation Between BHP Group and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both BHP Group 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 BHP Group and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHP Group Limited and Origin Agritech, you can compare the effects of market volatilities on BHP Group 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 BHP Group with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Origin Agritech.
Diversification Opportunities for BHP Group and Origin Agritech
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BHP and Origin is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and BHP Group 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 BHP Group Limited 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 BHP Group i.e., BHP Group and Origin Agritech go up and down completely randomly.
Pair Corralation between BHP Group and Origin Agritech
Assuming the 90 days trading horizon BHP Group Limited is expected to under-perform the Origin Agritech. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 2.52 times less risky than Origin Agritech. The stock trades about -0.14 of its potential returns per unit of risk. The Origin Agritech is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 246.00 in Origin Agritech on August 29, 2024 and sell it today you would lose (12.00) from holding Origin Agritech or give up 4.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Origin Agritech
Performance |
| Timeline |
| BHP Group Limited |
| Origin Agritech |
BHP Group and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Origin Agritech
The main advantage of trading using opposite BHP Group and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group 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.| BHP Group vs. Superior Plus Corp | BHP Group vs. NMI Holdings | BHP Group vs. Origin Agritech | BHP Group vs. SIVERS SEMICONDUCTORS AB |
| Origin Agritech vs. 24SEVENOFFICE GROUP AB | Origin Agritech vs. MAVEN WIRELESS SWEDEN | Origin Agritech vs. SIDETRADE EO 1 | Origin Agritech vs. HK Electric Investments |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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