Correlation Between Origin Agritech and Alibaba Health

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

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

Diversification Opportunities for Origin Agritech and Alibaba Health

-0.03

Correlation Coefficient

Origin Agritech  Alibaba Health

Good diversification

The 3 months correlation between Origin and Alibaba is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Alibaba Health Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Health Infor 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 Alibaba Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Health Infor has no effect on the direction of Origin Agritech i.e., Origin Agritech and Alibaba Health go up and down completely randomly.

Pair Corralation between Origin Agritech and Alibaba Health

Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Alibaba Health. In addition to that, Origin Agritech is 1.04 times more volatile than Alibaba Health Information. It trades about -0.13 of its total potential returns per unit of risk. Alibaba Health Information is currently generating about -0.12 per unit of volatility. If you would invest  56.00  in Alibaba Health Information on October 8, 2024 and sell it today you would lose (16.00) from holding Alibaba Health Information or give up 28.57% of portfolio value over 90 days.

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

Origin Agritech  vs.  Alibaba Health Information

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.

Alibaba Health Infor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alibaba Health Information 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.

Pair Trading with Origin Agritech and Alibaba Health

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

The idea behind Origin Agritech and Alibaba Health Information 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 Transaction History module to view history of all your transactions and understand their impact on performance.