Correlation Between CHINA TONTINE and Origin Agritech

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Can any of the company-specific risk be diversified away by investing in both CHINA TONTINE 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 CHINA TONTINE and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA TONTINE WINES and Origin Agritech, you can compare the effects of market volatilities on CHINA TONTINE 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 CHINA TONTINE with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TONTINE and Origin Agritech.

Diversification Opportunities for CHINA TONTINE and Origin Agritech

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between CHINA and Origin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TONTINE WINES and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and CHINA TONTINE 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 CHINA TONTINE WINES 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 CHINA TONTINE i.e., CHINA TONTINE and Origin Agritech go up and down completely randomly.

Pair Corralation between CHINA TONTINE and Origin Agritech

Assuming the 90 days trading horizon CHINA TONTINE WINES is expected to generate 7.34 times more return on investment than Origin Agritech. However, CHINA TONTINE is 7.34 times more volatile than Origin Agritech. It trades about 0.05 of its potential returns per unit of risk. Origin Agritech is currently generating about 0.03 per unit of risk. If you would invest  0.70  in CHINA TONTINE WINES on September 12, 2024 and sell it today you would earn a total of  6.30  from holding CHINA TONTINE WINES or generate 900.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CHINA TONTINE WINES  vs.  Origin Agritech

 Performance 
       Timeline  
CHINA TONTINE WINES 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days CHINA TONTINE WINES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, CHINA TONTINE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Origin Agritech 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Origin Agritech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Origin Agritech reported solid returns over the last few months and may actually be approaching a breakup point.

CHINA TONTINE and Origin Agritech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CHINA TONTINE and Origin Agritech

The main advantage of trading using opposite CHINA TONTINE and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TONTINE 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.
The idea behind CHINA TONTINE WINES and Origin Agritech pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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