Correlation Between American Financial and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both American Financial 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 American Financial and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Financial Group and Origin Agritech, you can compare the effects of market volatilities on American Financial 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 American Financial with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Financial and Origin Agritech.
Diversification Opportunities for American Financial and Origin Agritech
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Origin is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding American Financial Group and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and American Financial 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 American Financial Group 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 American Financial i.e., American Financial and Origin Agritech go up and down completely randomly.
Pair Corralation between American Financial and Origin Agritech
Assuming the 90 days horizon American Financial Group is expected to generate 0.43 times more return on investment than Origin Agritech. However, American Financial Group is 2.33 times less risky than Origin Agritech. It trades about 0.46 of its potential returns per unit of risk. Origin Agritech is currently generating about 0.06 per unit of risk. If you would invest 11,353 in American Financial Group on September 3, 2024 and sell it today you would earn a total of 2,647 from holding American Financial Group or generate 23.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Financial Group vs. Origin Agritech
Performance |
| Timeline |
| American Financial |
| Origin Agritech |
American Financial and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Financial and Origin Agritech
The main advantage of trading using opposite American Financial and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Financial 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.| American Financial vs. The Peoples Insurance | American Financial vs. Loews Corp | American Financial vs. The Hanover Insurance | American Financial vs. Superior Plus Corp |
| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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