Correlation Between CDN IMPERIAL and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL 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 CDN IMPERIAL and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDN IMPERIAL BANK and Origin Agritech, you can compare the effects of market volatilities on CDN IMPERIAL 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 CDN IMPERIAL with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and Origin Agritech.
Diversification Opportunities for CDN IMPERIAL and Origin Agritech
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CDN and Origin is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and CDN IMPERIAL 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 CDN IMPERIAL BANK 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 CDN IMPERIAL i.e., CDN IMPERIAL and Origin Agritech go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and Origin Agritech
Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.26 times more return on investment than Origin Agritech. However, CDN IMPERIAL BANK is 3.83 times less risky than Origin Agritech. It trades about 0.01 of its potential returns per unit of risk. Origin Agritech is currently generating about -0.11 per unit of risk. If you would invest 6,021 in CDN IMPERIAL BANK on October 30, 2024 and sell it today you would earn a total of 10.00 from holding CDN IMPERIAL BANK or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. Origin Agritech
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| Origin Agritech |
CDN IMPERIAL and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and Origin Agritech
The main advantage of trading using opposite CDN IMPERIAL and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL 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.| CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc |
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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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