Correlation Between Origin Agritech and Dr Reddys

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

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

Diversification Opportunities for Origin Agritech and Dr Reddys

0.13

Correlation Coefficient

Origin Agritech  Dr Reddys

Average diversification

The 3 months correlation between Origin and RDDA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Dr Reddys Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Reddys Laboratories 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 Dr Reddys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Reddys Laboratories has no effect on the direction of Origin Agritech i.e., Origin Agritech and Dr Reddys go up and down completely randomly.

Pair Corralation between Origin Agritech and Dr Reddys

Assuming the 90 days trading horizon Origin Agritech is expected to generate 2.86 times more return on investment than Dr Reddys. However, Origin Agritech is 2.86 times more volatile than Dr Reddys Laboratories. It trades about -0.03 of its potential returns per unit of risk. Dr Reddys Laboratories is currently generating about -0.14 per unit of risk. If you would invest  204.00  in Origin Agritech on December 21, 2024 and sell it today you would lose (31.00) from holding Origin Agritech or give up 15.2% of portfolio value over 90 days.

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

Origin Agritech  vs.  Dr Reddys Laboratories

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Dr Reddys Laboratories

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dr Reddys Laboratories 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 fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Origin Agritech and Dr Reddys

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

The idea behind Origin Agritech and Dr Reddys Laboratories 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..