Correlation Between Westlake Chemical and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical 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 Westlake Chemical and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical and Origin Agritech, you can compare the effects of market volatilities on Westlake Chemical 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 Westlake Chemical with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Origin Agritech.
Diversification Opportunities for Westlake Chemical and Origin Agritech
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westlake and Origin is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and Westlake Chemical 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 Westlake Chemical 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 Westlake Chemical i.e., Westlake Chemical and Origin Agritech go up and down completely randomly.
Pair Corralation between Westlake Chemical and Origin Agritech
Assuming the 90 days horizon Westlake Chemical is expected to generate 0.29 times more return on investment than Origin Agritech. However, Westlake Chemical is 3.5 times less risky than Origin Agritech. It trades about 0.03 of its potential returns per unit of risk. Origin Agritech is currently generating about -0.01 per unit of risk. If you would invest 9,989 in Westlake Chemical on September 4, 2024 and sell it today you would earn a total of 2,211 from holding Westlake Chemical or generate 22.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Westlake Chemical vs. Origin Agritech
Performance |
| Timeline |
| Westlake Chemical |
| Origin Agritech |
Westlake Chemical and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Origin Agritech
The main advantage of trading using opposite Westlake Chemical and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical 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.| Westlake Chemical vs. The Sherwin Williams | Westlake Chemical vs. Dupont De Nemours | Westlake Chemical vs. Superior Plus Corp | Westlake Chemical vs. NMI Holdings |
| Origin Agritech vs. SMA Solar Technology | Origin Agritech vs. Aedas Homes SA | Origin Agritech vs. PKSHA TECHNOLOGY INC | Origin Agritech vs. Vishay Intertechnology |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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