Correlation Between Origin Agritech and CBRE Group

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

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

Diversification Opportunities for Origin Agritech and CBRE Group

0.22

Correlation Coefficient

Origin Agritech  CBRE Group

Modest diversification

The 3 months correlation between Origin and CBRE is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and CBRE Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBRE Group Class 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 CBRE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBRE Group Class has no effect on the direction of Origin Agritech i.e., Origin Agritech and CBRE Group go up and down completely randomly.

Pair Corralation between Origin Agritech and CBRE Group

Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the CBRE Group. In addition to that, Origin Agritech is 2.67 times more volatile than CBRE Group Class. It trades about -0.04 of its total potential returns per unit of risk. CBRE Group Class is currently generating about 0.01 per unit of volatility. If you would invest  13,200  in CBRE Group Class on November 29, 2024 and sell it today you would earn a total of  0.00  from holding CBRE Group Class or generate 0.0% return on investment over 90 days.

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

Origin Agritech  vs.  CBRE Group Class

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 unsteady 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.

CBRE Group Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days CBRE Group Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CBRE Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Origin Agritech and CBRE Group

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

The idea behind Origin Agritech and CBRE Group Class 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.