Correlation Between NEXT Plc and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both NEXT Plc 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 NEXT Plc and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXT plc and Origin Agritech, you can compare the effects of market volatilities on NEXT Plc 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 NEXT Plc with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXT Plc and Origin Agritech.
Diversification Opportunities for NEXT Plc and Origin Agritech
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NEXT and Origin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NEXT plc and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and NEXT Plc 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 NEXT plc 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 NEXT Plc i.e., NEXT Plc and Origin Agritech go up and down completely randomly.
Pair Corralation between NEXT Plc and Origin Agritech
Assuming the 90 days horizon NEXT plc is expected to generate 0.34 times more return on investment than Origin Agritech. However, NEXT plc is 2.98 times less risky than Origin Agritech. It trades about 0.04 of its potential returns per unit of risk. Origin Agritech is currently generating about -0.07 per unit of risk. If you would invest 10,778 in NEXT plc on November 28, 2024 and sell it today you would earn a total of 1,222 from holding NEXT plc or generate 11.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXT plc vs. Origin Agritech
Performance |
| Timeline |
| NEXT plc |
| Origin Agritech |
NEXT Plc and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXT Plc and Origin Agritech
The main advantage of trading using opposite NEXT Plc and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXT Plc 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.| NEXT Plc vs. MARKET VECTR RETAIL | NEXT Plc vs. Indutrade AB | NEXT Plc vs. Fast Retailing Co | NEXT Plc vs. Harmony Gold Mining |
| Origin Agritech vs. Computershare Limited | Origin Agritech vs. Hyster Yale Materials Handling | Origin Agritech vs. EAGLE MATERIALS | Origin Agritech vs. Martin Marietta Materials |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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