Correlation Between Origin Agritech and BLUELINX HLDGS

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

By analyzing existing cross correlation between Origin Agritech and BLUELINX HLDGS DL 01, you can compare the effects of market volatilities on Origin Agritech and BLUELINX HLDGS 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 BLUELINX HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and BLUELINX HLDGS.

Diversification Opportunities for Origin Agritech and BLUELINX HLDGS

0.42

Correlation Coefficient

Origin Agritech  BLUELINX HLDGS

Very weak diversification

The 3 months correlation between Origin and BLUELINX is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and BLUELINX HLDGS DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLUELINX HLDGS DL 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 BLUELINX HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLUELINX HLDGS DL has no effect on the direction of Origin Agritech i.e., Origin Agritech and BLUELINX HLDGS go up and down completely randomly.

Pair Corralation between Origin Agritech and BLUELINX HLDGS

Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the BLUELINX HLDGS. In addition to that, Origin Agritech is 3.13 times more volatile than BLUELINX HLDGS DL 01. It trades about -0.02 of its total potential returns per unit of risk. BLUELINX HLDGS DL 01 is currently generating about -0.02 per unit of volatility. If you would invest  10,600  in BLUELINX HLDGS DL 01 on October 20, 2024 and sell it today you would lose (100.00) from holding BLUELINX HLDGS DL 01 or give up 0.94% of portfolio value over 90 days.

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

Origin Agritech  vs.  BLUELINX HLDGS DL 01

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.

BLUELINX HLDGS DL

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BLUELINX HLDGS DL 01 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, BLUELINX HLDGS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Origin Agritech and BLUELINX HLDGS

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

The idea behind Origin Agritech and BLUELINX HLDGS DL 01 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.