Correlation Between Wells Fargo and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both Wells Fargo 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 Wells Fargo and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between West Fraser Timber and Origin Agritech, you can compare the effects of market volatilities on Wells Fargo 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 Wells Fargo with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Origin Agritech.
Diversification Opportunities for Wells Fargo and Origin Agritech
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wells and Origin is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding West Fraser Timber and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and Wells Fargo 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 West Fraser Timber 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 Wells Fargo i.e., Wells Fargo and Origin Agritech go up and down completely randomly.
Pair Corralation between Wells Fargo and Origin Agritech
Assuming the 90 days horizon Wells Fargo is expected to generate 1.46 times less return on investment than Origin Agritech. But when comparing it to its historical volatility, West Fraser Timber is 3.64 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 of returns per unit of risk over similar time horizon. If you would invest 368.00 in Origin Agritech on September 12, 2024 and sell it today you would lose (130.00) from holding Origin Agritech or give up 35.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
West Fraser Timber vs. Origin Agritech
Performance |
| Timeline |
| West Fraser Timber |
| Origin Agritech |
Wells Fargo and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Origin Agritech
The main advantage of trading using opposite Wells Fargo and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo 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.| Wells Fargo vs. Charter Communications | Wells Fargo vs. Zoom Video Communications | Wells Fargo vs. Shenandoah Telecommunications | Wells Fargo vs. Highlight Communications AG |
| Origin Agritech vs. REINET INVESTMENTS SCA | Origin Agritech vs. AOYAMA TRADING | Origin Agritech vs. Japan Asia Investment | Origin Agritech vs. MAROC TELECOM |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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