Correlation Between Elis SA and Origin Agritech

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

By analyzing existing cross correlation between Elis SA and Origin Agritech, you can compare the effects of market volatilities on Elis SA and Origin Agritech 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 Elis SA with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elis SA and Origin Agritech.

Diversification Opportunities for Elis SA and Origin Agritech

0.4

Correlation Coefficient

Elis SA  Origin Agritech

Very weak diversification

The 3 months correlation between Elis and Origin is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Elis SA and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and Elis SA 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 Elis SA are associated (or correlated) with Origin Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Agritech has no effect on the direction of Elis SA i.e., Elis SA and Origin Agritech go up and down completely randomly.

Pair Corralation between Elis SA and Origin Agritech

Assuming the 90 days horizon Elis SA is expected to generate 0.26 times more return on investment than Origin Agritech. However, Elis SA is 3.87 times less risky than Origin Agritech. It trades about 0.03 of its potential returns per unit of risk. Origin Agritech is currently generating about 0.01 per unit of risk. If you would invest  1,637  in Elis SA on October 4, 2024 and sell it today you would earn a total of  241.00  from holding Elis SA or generate 14.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.7%
Values	Daily Returns

Elis SA  vs.  Origin Agritech

Elis SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 uncertain 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 Elis SA and Origin Agritech

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

The idea behind Elis SA and Origin Agritech 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.