Correlation Between Rolls-Royce Holdings and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both Rolls-Royce Holdings 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 Rolls-Royce Holdings and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rolls Royce Holdings plc and Origin Agritech, you can compare the effects of market volatilities on Rolls-Royce Holdings 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 Rolls-Royce Holdings with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rolls-Royce Holdings and Origin Agritech.
Diversification Opportunities for Rolls-Royce Holdings and Origin Agritech
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rolls-Royce and Origin is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Rolls Royce Holdings plc and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and Rolls-Royce Holdings 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 Rolls Royce Holdings plc 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 Rolls-Royce Holdings i.e., Rolls-Royce Holdings and Origin Agritech go up and down completely randomly.
Pair Corralation between Rolls-Royce Holdings and Origin Agritech
Assuming the 90 days horizon Rolls Royce Holdings plc is expected to generate 0.75 times more return on investment than Origin Agritech. However, Rolls Royce Holdings plc is 1.33 times less risky than Origin Agritech. It trades about 0.29 of its potential returns per unit of risk. Origin Agritech is currently generating about -0.08 per unit of risk. If you would invest 741.00 in Rolls Royce Holdings plc on December 2, 2024 and sell it today you would earn a total of 191.00 from holding Rolls Royce Holdings plc or generate 25.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Rolls Royce Holdings plc vs. Origin Agritech
Performance |
Timeline |
Rolls Royce Holdings |
Origin Agritech |
Rolls-Royce Holdings and Origin Agritech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rolls-Royce Holdings and Origin Agritech
The main advantage of trading using opposite Rolls-Royce Holdings and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rolls-Royce Holdings 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.Rolls-Royce Holdings vs. Salesforce | Rolls-Royce Holdings vs. Qurate Retail Series | Rolls-Royce Holdings vs. FLOW TRADERS LTD | Rolls-Royce Holdings vs. SALESFORCE INC CDR |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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