Correlation Between Origin Agritech and Fifth Third

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

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

Diversification Opportunities for Origin Agritech and Fifth Third

-0.26

Correlation Coefficient

Origin Agritech  Fifth Third

Very good diversification

The 3 months correlation between Origin and Fifth is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Fifth Third Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fifth Third Bancorp 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 Fifth Third. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fifth Third Bancorp has no effect on the direction of Origin Agritech i.e., Origin Agritech and Fifth Third go up and down completely randomly.

Pair Corralation between Origin Agritech and Fifth Third

Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Fifth Third. In addition to that, Origin Agritech is 2.78 times more volatile than Fifth Third Bancorp. It trades about -0.02 of its total potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.04 per unit of volatility. If you would invest  2,922  in Fifth Third Bancorp on October 5, 2024 and sell it today you would earn a total of  1,156  from holding Fifth Third Bancorp or generate 39.56% 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.  Fifth Third Bancorp

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.

Fifth Third Bancorp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Fifth Third Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Fifth Third may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Origin Agritech and Fifth Third

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

The idea behind Origin Agritech and Fifth Third Bancorp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.