Correlation Between Chemed and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both Chemed 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 Chemed and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemed and Origin Agritech, you can compare the effects of market volatilities on Chemed 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 Chemed with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemed and Origin Agritech.
Diversification Opportunities for Chemed and Origin Agritech
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chemed and Origin is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Chemed and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and Chemed 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 Chemed 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 Chemed i.e., Chemed and Origin Agritech go up and down completely randomly.
Pair Corralation between Chemed and Origin Agritech
Assuming the 90 days horizon Chemed is expected to generate 1.62 times less return on investment than Origin Agritech. But when comparing it to its historical volatility, Chemed is 4.28 times less risky than Origin Agritech. It trades about 0.27 of its potential returns per unit of risk. Origin Agritech is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 204.00 in Origin Agritech on October 31, 2024 and sell it today you would earn a total of 20.00 from holding Origin Agritech or generate 9.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Chemed vs. Origin Agritech
Performance |
| Timeline |
| Chemed |
| Origin Agritech |
Chemed and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemed and Origin Agritech
The main advantage of trading using opposite Chemed and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemed 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.| Chemed vs. Sekisui Chemical Co | Chemed vs. Molson Coors Beverage | Chemed vs. TRI CHEMICAL LABORATINC | Chemed vs. MONEYSUPERMARKET |
| Origin Agritech vs. AWILCO DRILLING PLC | Origin Agritech vs. Major Drilling Group | Origin Agritech vs. PLAYMATES TOYS | Origin Agritech vs. InPlay Oil Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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