Correlation Between Origin Agritech and Seven West

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

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

Diversification Opportunities for Origin Agritech and Seven West

0.37

Correlation Coefficient

Origin Agritech  Seven West

Weak diversification

The 3 months correlation between Origin and Seven is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media 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 Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of Origin Agritech i.e., Origin Agritech and Seven West go up and down completely randomly.

Pair Corralation between Origin Agritech and Seven West

Assuming the 90 days trading horizon Origin Agritech is expected to generate 1.01 times less return on investment than Seven West. In addition to that, Origin Agritech is 1.28 times more volatile than Seven West Media. It trades about 0.03 of its total potential returns per unit of risk. Seven West Media is currently generating about 0.04 per unit of volatility. If you would invest  8.05  in Seven West Media on December 29, 2024 and sell it today you would earn a total of  0.35  from holding Seven West Media or generate 4.35% return on investment over 90 days.

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

Origin Agritech  vs.  Seven West Media

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.

Seven West Media

Risk-Adjusted Performance

Weak

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

Pair Trading with Origin Agritech and Seven West

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

The idea behind Origin Agritech and Seven West Media 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.