Correlation Between General Dynamics and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both General Dynamics 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 General Dynamics and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Dynamics and Origin Agritech, you can compare the effects of market volatilities on General Dynamics 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 General Dynamics with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Origin Agritech.
Diversification Opportunities for General Dynamics and Origin Agritech
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between General and Origin is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and General Dynamics 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 General Dynamics 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 General Dynamics i.e., General Dynamics and Origin Agritech go up and down completely randomly.
Pair Corralation between General Dynamics and Origin Agritech
Assuming the 90 days horizon General Dynamics is expected to generate 0.27 times more return on investment than Origin Agritech. However, General Dynamics is 3.72 times less risky than Origin Agritech. It trades about -0.08 of its potential returns per unit of risk. Origin Agritech is currently generating about -0.07 per unit of risk. If you would invest 26,131 in General Dynamics on December 2, 2024 and sell it today you would lose (1,826) from holding General Dynamics or give up 6.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
General Dynamics vs. Origin Agritech
Performance |
Timeline |
General Dynamics |
Origin Agritech |
General Dynamics and Origin Agritech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with General Dynamics and Origin Agritech
The main advantage of trading using opposite General Dynamics and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics 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.General Dynamics vs. Warner Music Group | General Dynamics vs. MUTUIONLINE | General Dynamics vs. Zoom Video Communications | General Dynamics vs. Carsales |
Origin Agritech vs. Spirent Communications plc | Origin Agritech vs. Kingdee International Software | Origin Agritech vs. ASURE SOFTWARE | Origin Agritech vs. Hemisphere Energy Corp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
Transaction History View history of all your transactions and understand their impact on performance | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |