Correlation Between Origin Agritech and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both Origin Agritech and Vulcan Materials 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 Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Agritech and Vulcan Materials, you can compare the effects of market volatilities on Origin Agritech and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Agritech and Vulcan Materials.
Diversification Opportunities for Origin Agritech and Vulcan Materials
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Origin and Vulcan is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of Origin Agritech i.e., Origin Agritech and Vulcan Materials go up and down completely randomly.
Pair Corralation between Origin Agritech and Vulcan Materials
Assuming the 90 days trading horizon Origin Agritech is expected to generate 4.2 times more return on investment than Vulcan Materials. However, Origin Agritech is 4.2 times more volatile than Vulcan Materials. It trades about 0.0 of its potential returns per unit of risk. Vulcan Materials is currently generating about -0.07 per unit of risk. If you would invest 202.00 in Origin Agritech on December 2, 2024 and sell it today you would lose (14.00) from holding Origin Agritech or give up 6.93% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Origin Agritech vs. Vulcan Materials
Performance |
Timeline |
Origin Agritech |
Vulcan Materials |
Origin Agritech and Vulcan Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Origin Agritech and Vulcan Materials
The main advantage of trading using opposite Origin Agritech and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Agritech position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.Origin Agritech vs. Spirent Communications plc | Origin Agritech vs. Kingdee International Software | Origin Agritech vs. ASURE SOFTWARE | Origin Agritech vs. Hemisphere Energy Corp |
Vulcan Materials vs. United Breweries Co | Vulcan Materials vs. Fevertree Drinks PLC | Vulcan Materials vs. Thai Beverage Public | Vulcan Materials vs. Molson Coors Beverage |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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