Correlation Between Origin Agritech and INTERSHOP Communications

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

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

Diversification Opportunities for Origin Agritech and INTERSHOP Communications

0.06

Correlation Coefficient

Origin Agritech  INTERSHOP Communications

Significant diversification

The 3 months correlation between Origin and INTERSHOP is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and INTERSHOP Communications Aktie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERSHOP Communications 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 INTERSHOP Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERSHOP Communications has no effect on the direction of Origin Agritech i.e., Origin Agritech and INTERSHOP Communications go up and down completely randomly.

Pair Corralation between Origin Agritech and INTERSHOP Communications

Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the INTERSHOP Communications. In addition to that, Origin Agritech is 1.66 times more volatile than INTERSHOP Communications Aktiengesellschaft. It trades about -0.07 of its total potential returns per unit of risk. INTERSHOP Communications Aktiengesellschaft is currently generating about 0.07 per unit of volatility. If you would invest  180.00  in INTERSHOP Communications Aktiengesellschaft on November 30, 2024 and sell it today you would earn a total of  20.00  from holding INTERSHOP Communications Aktiengesellschaft or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Origin Agritech  vs.  INTERSHOP Communications Aktie

Origin Agritech

Risk-Adjusted Performance

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 March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

INTERSHOP Communications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, INTERSHOP Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Origin Agritech and INTERSHOP Communications

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

The idea behind Origin Agritech and INTERSHOP Communications Aktiengesellschaft 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.