Correlation Between Origin Agritech and SIDETRADE

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

By analyzing existing cross correlation between Origin Agritech and SIDETRADE EO 1, you can compare the effects of market volatilities on Origin Agritech and SIDETRADE 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 SIDETRADE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and SIDETRADE.

Diversification Opportunities for Origin Agritech and SIDETRADE

0.37

Correlation Coefficient

Origin Agritech  SIDETRADE

Weak diversification

The 3 months correlation between Origin and SIDETRADE is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and SIDETRADE EO 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIDETRADE EO 1 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 SIDETRADE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIDETRADE EO 1 has no effect on the direction of Origin Agritech i.e., Origin Agritech and SIDETRADE go up and down completely randomly.

Pair Corralation between Origin Agritech and SIDETRADE

Assuming the 90 days trading horizon Origin Agritech is expected to generate 2.12 times more return on investment than SIDETRADE. However, Origin Agritech is 2.12 times more volatile than SIDETRADE EO 1. It trades about 0.05 of its potential returns per unit of risk. SIDETRADE EO 1 is currently generating about 0.09 per unit of risk. If you would invest  234.00  in Origin Agritech on September 5, 2024 and sell it today you would earn a total of  20.00  from holding Origin Agritech or generate 8.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Origin Agritech  vs.  SIDETRADE EO 1

Origin Agritech

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Agritech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Origin Agritech reported solid returns over the last few months and may actually be approaching a breakup point.

SIDETRADE EO 1

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SIDETRADE EO 1 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, SIDETRADE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Origin Agritech and SIDETRADE

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

The idea behind Origin Agritech and SIDETRADE EO 1 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.