Correlation Between Origin Agritech and Yara International

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

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

Diversification Opportunities for Origin Agritech and Yara International

0.4

Correlation Coefficient

Origin Agritech  Yara International

Very weak diversification

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

Pair Corralation between Origin Agritech and Yara International

Given the investment horizon of 90 days Origin Agritech is expected to generate 3.34 times less return on investment than Yara International. In addition to that, Origin Agritech is 3.78 times more volatile than Yara International ASA. It trades about 0.0 of its total potential returns per unit of risk. Yara International ASA is currently generating about 0.05 per unit of volatility. If you would invest  2,811  in Yara International ASA on December 27, 2024 and sell it today you would earn a total of  98.00  from holding Yara International ASA or generate 3.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Origin Agritech  vs.  Yara International ASA

Origin Agritech

Risk-Adjusted Performance

Weak

Over the last 90 days Origin Agritech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Origin Agritech is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Yara International ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yara International ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Yara International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Origin Agritech and Yara International

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

The idea behind Origin Agritech and Yara International ASA 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.