Correlation Between AutoZone and Origin Agritech

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

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

Diversification Opportunities for AutoZone and Origin Agritech

0.1

Correlation Coefficient

AutoZone  Origin Agritech

Average diversification

The 3 months correlation between AutoZone and Origin is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding AutoZone and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and AutoZone 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 AutoZone 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 AutoZone i.e., AutoZone and Origin Agritech go up and down completely randomly.

Pair Corralation between AutoZone and Origin Agritech

Assuming the 90 days horizon AutoZone is expected to generate 0.24 times more return on investment than Origin Agritech. However, AutoZone is 4.22 times less risky than Origin Agritech. It trades about 0.15 of its potential returns per unit of risk. Origin Agritech is currently generating about 0.0 per unit of risk. If you would invest  308,500  in AutoZone on December 30, 2024 and sell it today you would earn a total of  37,800  from holding AutoZone or generate 12.25% return on investment over 90 days.

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

AutoZone  vs.  Origin Agritech

AutoZone

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AutoZone may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Origin Agritech

Risk-Adjusted Performance

Very Weak

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

Pair Trading with AutoZone and Origin Agritech

The main advantage of trading using opposite AutoZone and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoZone 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 AutoZone 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.