Correlation Between Origin Agritech and PDS Biotechnology

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

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

Diversification Opportunities for Origin Agritech and PDS Biotechnology

0.29

Correlation Coefficient

Origin Agritech  PDS Biotechnology

Modest diversification

The 3 months correlation between Origin and PDS is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and PDS Biotechnology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDS Biotechnology Corp 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 PDS Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDS Biotechnology Corp has no effect on the direction of Origin Agritech i.e., Origin Agritech and PDS Biotechnology go up and down completely randomly.

Pair Corralation between Origin Agritech and PDS Biotechnology

Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the PDS Biotechnology. In addition to that, Origin Agritech is 1.06 times more volatile than PDS Biotechnology Corp. It trades about -0.09 of its total potential returns per unit of risk. PDS Biotechnology Corp is currently generating about -0.07 per unit of volatility. If you would invest  307.00  in PDS Biotechnology Corp on October 8, 2024 and sell it today you would lose (140.00) from holding PDS Biotechnology Corp or give up 45.6% of portfolio value over 90 days.

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

Origin Agritech  vs.  PDS Biotechnology Corp

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.

PDS Biotechnology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PDS Biotechnology Corp 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.

Pair Trading with Origin Agritech and PDS Biotechnology

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

The idea behind Origin Agritech and PDS Biotechnology Corp 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 Managers module to screen money managers from public funds and ETFs managed around the world.