Correlation Between Eisai Co and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both Eisai Co 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 Eisai Co and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eisai Co and Origin Agritech, you can compare the effects of market volatilities on Eisai Co 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 Eisai Co with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eisai Co and Origin Agritech.
Diversification Opportunities for Eisai Co and Origin Agritech
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eisai and Origin is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Eisai Co and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and Eisai Co 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 Eisai Co 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 Eisai Co i.e., Eisai Co and Origin Agritech go up and down completely randomly.
Pair Corralation between Eisai Co and Origin Agritech
Assuming the 90 days horizon Eisai Co is expected to under-perform the Origin Agritech. But the stock apears to be less risky and, when comparing its historical volatility, Eisai Co is 2.52 times less risky than Origin Agritech. The stock trades about -0.05 of its potential returns per unit of risk. The Origin Agritech is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 945.00 in Origin Agritech on September 3, 2024 and sell it today you would lose (703.00) from holding Origin Agritech or give up 74.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eisai Co vs. Origin Agritech
Performance |
| Timeline |
| Eisai Co |
| Origin Agritech |
Eisai Co and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eisai Co and Origin Agritech
The main advantage of trading using opposite Eisai Co and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eisai Co 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.| Eisai Co vs. NorAm Drilling AS | Eisai Co vs. CompuGroup Medical SE | Eisai Co vs. 24SEVENOFFICE GROUP AB | Eisai Co vs. Beazer Homes USA |
| 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 Stocks Directory module to find actively traded stocks across global markets.
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