Correlation Between Origin Agritech and Esfera Robotics

Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Esfera Robotics 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 Esfera Robotics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Origin Agritech and Esfera Robotics R, you can compare the effects of market volatilities on Origin Agritech and Esfera Robotics 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 Esfera Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Esfera Robotics.

Diversification Opportunities for Origin Agritech and Esfera Robotics

-0.53

Correlation Coefficient

Origin Agritech  Esfera Robotics

Excellent diversification

The 3 months correlation between Origin and Esfera is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Esfera Robotics R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esfera Robotics R 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 Esfera Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esfera Robotics R has no effect on the direction of Origin Agritech i.e., Origin Agritech and Esfera Robotics go up and down completely randomly.

Pair Corralation between Origin Agritech and Esfera Robotics

Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Esfera Robotics. In addition to that, Origin Agritech is 3.5 times more volatile than Esfera Robotics R. It trades about -0.1 of its total potential returns per unit of risk. Esfera Robotics R is currently generating about 0.18 per unit of volatility. If you would invest  31,729  in Esfera Robotics R on October 9, 2024 and sell it today you would earn a total of  3,923  from holding Esfera Robotics R or generate 12.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Origin Agritech  vs.  Esfera Robotics R

Origin Agritech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Origin Agritech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Esfera Robotics R

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Esfera Robotics R has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat weak basic indicators, Esfera Robotics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Origin Agritech and Esfera Robotics

The main advantage of trading using opposite Origin Agritech and Esfera Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Esfera Robotics 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 Esfera Robotics will offset losses from the drop in Esfera Robotics' long position.

The idea behind Origin Agritech and Esfera Robotics R pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.