Correlation Between Canon and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both Canon 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 Canon and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canon Inc and Origin Agritech, you can compare the effects of market volatilities on Canon 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 Canon with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon and Origin Agritech.
Diversification Opportunities for Canon and Origin Agritech
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Canon and Origin is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Canon Inc and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and Canon 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 Canon Inc 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 Canon i.e., Canon and Origin Agritech go up and down completely randomly.
Pair Corralation between Canon and Origin Agritech
Assuming the 90 days trading horizon Canon Inc is expected to generate 0.29 times more return on investment than Origin Agritech. However, Canon Inc is 3.51 times less risky than Origin Agritech. It trades about 0.05 of its potential returns per unit of risk. Origin Agritech is currently generating about 0.0 per unit of risk. If you would invest 2,320 in Canon Inc on August 31, 2024 and sell it today you would earn a total of 723.00 from holding Canon Inc or generate 31.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Canon Inc vs. Origin Agritech
Performance |
| Timeline |
| Canon Inc |
| Origin Agritech |
Canon and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canon and Origin Agritech
The main advantage of trading using opposite Canon and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canon 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.| Canon vs. Summit Materials | Canon vs. THRACE PLASTICS | Canon vs. CarsalesCom | Canon vs. Compagnie Plastic Omnium |
| Origin Agritech vs. FORMPIPE SOFTWARE AB | Origin Agritech vs. PTT Global Chemical | Origin Agritech vs. Magic Software Enterprises | Origin Agritech vs. UPDATE SOFTWARE |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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