Correlation Between Procter Gamble and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both Procter Gamble 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 Procter Gamble and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Procter Gamble and Origin Agritech, you can compare the effects of market volatilities on Procter Gamble 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 Procter Gamble with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Origin Agritech.
Diversification Opportunities for Procter Gamble and Origin Agritech
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Origin is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and Procter Gamble 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 The Procter Gamble 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 Procter Gamble i.e., Procter Gamble and Origin Agritech go up and down completely randomly.
Pair Corralation between Procter Gamble and Origin Agritech
Assuming the 90 days horizon Procter Gamble is expected to generate 1.58 times less return on investment than Origin Agritech. But when comparing it to its historical volatility, The Procter Gamble is 4.3 times less risky than Origin Agritech. It trades about 0.36 of its potential returns per unit of risk. Origin Agritech is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 238.00 in Origin Agritech on August 30, 2024 and sell it today you would earn a total of 30.00 from holding Origin Agritech or generate 12.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Procter Gamble vs. Origin Agritech
Performance |
| Timeline |
| Procter Gamble |
| Origin Agritech |
Procter Gamble and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Origin Agritech
The main advantage of trading using opposite Procter Gamble and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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.| Procter Gamble vs. Verizon Communications | Procter Gamble vs. Lamar Advertising | Procter Gamble vs. Hemisphere Energy Corp | Procter Gamble vs. COMPUTERSHARE |
| Origin Agritech vs. OAKTRSPECLENDNEW | Origin Agritech vs. Jacquet Metal Service | Origin Agritech vs. MCEWEN MINING INC | Origin Agritech vs. URBAN OUTFITTERS |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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