Correlation Between Origin Agritech and ChemoMetec A/S

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

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

Diversification Opportunities for Origin Agritech and ChemoMetec A/S

-0.69

Correlation Coefficient

Origin Agritech  ChemoMetec A/S

Excellent diversification

The 3 months correlation between Origin and ChemoMetec is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and ChemoMetec AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChemoMetec A/S 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 ChemoMetec A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChemoMetec A/S has no effect on the direction of Origin Agritech i.e., Origin Agritech and ChemoMetec A/S go up and down completely randomly.

Pair Corralation between Origin Agritech and ChemoMetec A/S

Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the ChemoMetec A/S. But the stock apears to be less risky and, when comparing its historical volatility, Origin Agritech is 1.4 times less risky than ChemoMetec A/S. The stock trades about -0.09 of its potential returns per unit of risk. The ChemoMetec AS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  5,285  in ChemoMetec AS on October 6, 2024 and sell it today you would earn a total of  1,450  from holding ChemoMetec AS or generate 27.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

Origin Agritech  vs.  ChemoMetec AS

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 fragile 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.

ChemoMetec A/S

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ChemoMetec AS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ChemoMetec A/S reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Origin Agritech and ChemoMetec A/S

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

The idea behind Origin Agritech and ChemoMetec AS 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.