Correlation Between Origin Agritech and Essentra Plc

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

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

Diversification Opportunities for Origin Agritech and Essentra Plc

0.78

Correlation Coefficient

Origin Agritech  Essentra Plc

Poor diversification

The 3 months correlation between Origin and Essentra is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Essentra plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essentra plc 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 Essentra Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essentra plc has no effect on the direction of Origin Agritech i.e., Origin Agritech and Essentra Plc go up and down completely randomly.

Pair Corralation between Origin Agritech and Essentra Plc

Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Essentra Plc. In addition to that, Origin Agritech is 2.69 times more volatile than Essentra plc. It trades about -0.08 of its total potential returns per unit of risk. Essentra plc is currently generating about -0.18 per unit of volatility. If you would invest  180.00  in Essentra plc on October 20, 2024 and sell it today you would lose (34.00) from holding Essentra plc or give up 18.89% of portfolio value over 90 days.

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

Origin Agritech  vs.  Essentra plc

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.

Essentra plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Essentra plc 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.

Pair Trading with Origin Agritech and Essentra Plc

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

The idea behind Origin Agritech and Essentra plc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.