Correlation Between Origin Agritech and Société Générale

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

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

Diversification Opportunities for Origin Agritech and Société Générale

-0.25

Correlation Coefficient

Origin Agritech  Société Générale

Very good diversification

The 3 months correlation between Origin and Société is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Socit Gnrale Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit Gnrale Socit 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 Société Générale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit Gnrale Socit has no effect on the direction of Origin Agritech i.e., Origin Agritech and Société Générale go up and down completely randomly.

Pair Corralation between Origin Agritech and Société Générale

Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Société Générale. In addition to that, Origin Agritech is 1.95 times more volatile than Socit Gnrale Socit. It trades about -0.01 of its total potential returns per unit of risk. Socit Gnrale Socit is currently generating about 0.3 per unit of volatility. If you would invest  2,693  in Socit Gnrale Socit on December 28, 2024 and sell it today you would earn a total of  1,645  from holding Socit Gnrale Socit or generate 61.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Origin Agritech  vs.  Socit Gnrale Socit

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 nearly stable basic indicators, Origin Agritech is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Socit Gnrale Socit

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Socit Gnrale Socit are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Société Générale unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Origin Agritech and Société Générale

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

The idea behind Origin Agritech and Socit Gnrale Socit 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.