Correlation Between Origin Agritech and Stewart Information

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

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

Diversification Opportunities for Origin Agritech and Stewart Information

0.52

Correlation Coefficient

Origin Agritech  Stewart Information

Very weak diversification

The 3 months correlation between Origin and Stewart is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information 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 Stewart Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Information has no effect on the direction of Origin Agritech i.e., Origin Agritech and Stewart Information go up and down completely randomly.

Pair Corralation between Origin Agritech and Stewart Information

Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Stewart Information. In addition to that, Origin Agritech is 2.28 times more volatile than Stewart Information Services. It trades about -0.17 of its total potential returns per unit of risk. Stewart Information Services is currently generating about -0.18 per unit of volatility. If you would invest  6,550  in Stewart Information Services on October 22, 2024 and sell it today you would lose (400.00) from holding Stewart Information Services or give up 6.11% of portfolio value over 90 days.

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

Origin Agritech  vs.  Stewart Information Services

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.

Stewart Information

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Origin Agritech and Stewart Information

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

The idea behind Origin Agritech and Stewart Information Services 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.