Correlation Between DAIRY FARM and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both DAIRY FARM 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 DAIRY FARM and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAIRY FARM INTL and Origin Agritech, you can compare the effects of market volatilities on DAIRY FARM 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 DAIRY FARM with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and Origin Agritech.
Diversification Opportunities for DAIRY FARM and Origin Agritech
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DAIRY and Origin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and DAIRY FARM 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 DAIRY FARM INTL 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 DAIRY FARM i.e., DAIRY FARM and Origin Agritech go up and down completely randomly.
Pair Corralation between DAIRY FARM and Origin Agritech
Assuming the 90 days trading horizon DAIRY FARM INTL is expected to generate 0.42 times more return on investment than Origin Agritech. However, DAIRY FARM INTL is 2.39 times less risky than Origin Agritech. It trades about 0.17 of its potential returns per unit of risk. Origin Agritech is currently generating about 0.02 per unit of risk. If you would invest 144.00 in DAIRY FARM INTL on November 7, 2024 and sell it today you would earn a total of 78.00 from holding DAIRY FARM INTL or generate 54.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAIRY FARM INTL vs. Origin Agritech
Performance |
| Timeline |
| DAIRY FARM INTL |
| Origin Agritech |
DAIRY FARM and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAIRY FARM and Origin Agritech
The main advantage of trading using opposite DAIRY FARM and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM 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.| DAIRY FARM vs. National Health Investors | DAIRY FARM vs. PennantPark Investment | DAIRY FARM vs. CDL INVESTMENT | DAIRY FARM vs. Scottish Mortgage Investment |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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