Correlation Between Origin Agritech and Churchill Downs

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

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

Diversification Opportunities for Origin Agritech and Churchill Downs

-0.28

Correlation Coefficient

Origin Agritech  Churchill Downs

Very good diversification

The 3 months correlation between Origin and Churchill is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Churchill Downs Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Downs 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 Churchill Downs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Churchill Downs has no effect on the direction of Origin Agritech i.e., Origin Agritech and Churchill Downs go up and down completely randomly.

Pair Corralation between Origin Agritech and Churchill Downs

Assuming the 90 days trading horizon Origin Agritech is expected to generate 4.23 times more return on investment than Churchill Downs. However, Origin Agritech is 4.23 times more volatile than Churchill Downs Incorporated. It trades about 0.05 of its potential returns per unit of risk. Churchill Downs Incorporated is currently generating about 0.06 per unit of risk. If you would invest  171.00  in Origin Agritech on September 4, 2024 and sell it today you would earn a total of  71.00  from holding Origin Agritech or generate 41.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Origin Agritech  vs.  Churchill Downs Incorporated

Origin Agritech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Agritech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Origin Agritech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Churchill Downs

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Churchill Downs Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Churchill Downs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Origin Agritech and Churchill Downs

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

The idea behind Origin Agritech and Churchill Downs Incorporated 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.