Correlation Between Origin Agritech and American Vanguard
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and American Vanguard 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 Origin Agritech and American Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and American Vanguard, you can compare the effects of market volatilities on Origin Agritech and American Vanguard 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 Origin Agritech with a short position of American Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and American Vanguard.
Diversification Opportunities for Origin Agritech and American Vanguard
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Origin and American is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and American Vanguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Vanguard and Origin Agritech 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 Origin Agritech are associated (or correlated) with American Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Vanguard has no effect on the direction of Origin Agritech i.e., Origin Agritech and American Vanguard go up and down completely randomly.
Pair Corralation between Origin Agritech and American Vanguard
Given the investment horizon of 90 days Origin Agritech is expected to generate 1.44 times more return on investment than American Vanguard. However, Origin Agritech is 1.44 times more volatile than American Vanguard. It trades about 0.09 of its potential returns per unit of risk. American Vanguard is currently generating about 0.12 per unit of risk. If you would invest 264.00 in Origin Agritech on August 28, 2024 and sell it today you would earn a total of 19.00 from holding Origin Agritech or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Agritech vs. American Vanguard
Performance |
| Timeline |
| Origin Agritech |
| American Vanguard |
Origin Agritech and American Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Agritech and American Vanguard
The main advantage of trading using opposite Origin Agritech and American Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, American Vanguard 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 American Vanguard will offset losses from the drop in American Vanguard's long position.| Origin Agritech vs. Benson Hill, Common | Origin Agritech vs. Corteva | Origin Agritech vs. Scotts Miracle Gro | Origin Agritech vs. Yara International ASA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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