Correlation Between CENTRICA ADR and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both CENTRICA ADR 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 CENTRICA ADR and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CENTRICA ADR NEW and Origin Agritech, you can compare the effects of market volatilities on CENTRICA ADR 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 CENTRICA ADR with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTRICA ADR and Origin Agritech.
Diversification Opportunities for CENTRICA ADR and Origin Agritech
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CENTRICA and Origin is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CENTRICA ADR NEW and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and CENTRICA ADR 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 CENTRICA ADR NEW 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 CENTRICA ADR i.e., CENTRICA ADR and Origin Agritech go up and down completely randomly.
Pair Corralation between CENTRICA ADR and Origin Agritech
Assuming the 90 days trading horizon CENTRICA ADR NEW is expected to generate 0.24 times more return on investment than Origin Agritech. However, CENTRICA ADR NEW is 4.19 times less risky than Origin Agritech. It trades about 0.34 of its potential returns per unit of risk. Origin Agritech is currently generating about 0.06 per unit of risk. If you would invest 545.00 in CENTRICA ADR NEW on September 3, 2024 and sell it today you would earn a total of 50.00 from holding CENTRICA ADR NEW or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CENTRICA ADR NEW vs. Origin Agritech
Performance |
| Timeline |
| CENTRICA ADR NEW |
| Origin Agritech |
CENTRICA ADR and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CENTRICA ADR and Origin Agritech
The main advantage of trading using opposite CENTRICA ADR and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTRICA ADR 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.| CENTRICA ADR vs. CeoTronics AG | CENTRICA ADR vs. MOLSON RS BEVERAGE | CENTRICA ADR vs. EPSILON HEALTHCARE LTD | CENTRICA ADR vs. Collins Foods Limited |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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