Correlation Between Origin Agritech and VOLVO B

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

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

Diversification Opportunities for Origin Agritech and VOLVO B

-0.13

Correlation Coefficient

Origin Agritech  VOLVO B

Good diversification

The 3 months correlation between Origin and VOLVO is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and VOLVO B UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOLVO B UNSPADR 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 VOLVO B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOLVO B UNSPADR has no effect on the direction of Origin Agritech i.e., Origin Agritech and VOLVO B go up and down completely randomly.

Pair Corralation between Origin Agritech and VOLVO B

Assuming the 90 days trading horizon Origin Agritech is expected to generate 2.15 times less return on investment than VOLVO B. In addition to that, Origin Agritech is 2.67 times more volatile than VOLVO B UNSPADR. It trades about 0.03 of its total potential returns per unit of risk. VOLVO B UNSPADR is currently generating about 0.16 per unit of volatility. If you would invest  2,300  in VOLVO B UNSPADR on December 29, 2024 and sell it today you would earn a total of  480.00  from holding VOLVO B UNSPADR or generate 20.87% return on investment over 90 days.

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

Origin Agritech  vs.  VOLVO B UNSPADR

Origin Agritech

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Agritech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Origin Agritech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

VOLVO B UNSPADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VOLVO B UNSPADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, VOLVO B reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Origin Agritech and VOLVO B

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

The idea behind Origin Agritech and VOLVO B UNSPADR 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.