Correlation Between MGIC INVESTMENT and Origin Agritech

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

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

Diversification Opportunities for MGIC INVESTMENT and Origin Agritech

0.0

Correlation Coefficient

MGIC INVESTMENT  Origin Agritech

Pay attention - limited upside

The 3 months correlation between MGIC and Origin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and MGIC INVESTMENT 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 MGIC INVESTMENT 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 MGIC INVESTMENT i.e., MGIC INVESTMENT and Origin Agritech go up and down completely randomly.

Pair Corralation between MGIC INVESTMENT and Origin Agritech

Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 2.53 times less return on investment than Origin Agritech. But when comparing it to its historical volatility, MGIC INVESTMENT is 5.74 times less risky than Origin Agritech. It trades about 0.1 of its potential returns per unit of risk. Origin Agritech is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  174.00  in Origin Agritech on September 20, 2024 and sell it today you would earn a total of  44.00  from holding Origin Agritech or generate 25.29% return on investment over 90 days.

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

MGIC INVESTMENT  vs.  Origin Agritech

MGIC INVESTMENT

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MGIC INVESTMENT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, MGIC INVESTMENT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 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 MGIC INVESTMENT and Origin Agritech

The main advantage of trading using opposite MGIC INVESTMENT and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT 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 MGIC INVESTMENT 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.