Correlation Between Shionogi and Origin Agritech

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

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

Diversification Opportunities for Shionogi and Origin Agritech

-0.24

Correlation Coefficient

Shionogi  Origin Agritech

Very good diversification

The 3 months correlation between Shionogi and Origin is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Shionogi Co and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and Shionogi 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 Shionogi Co 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 Shionogi i.e., Shionogi and Origin Agritech go up and down completely randomly.

Pair Corralation between Shionogi and Origin Agritech

Assuming the 90 days horizon Shionogi Co is expected to generate 0.37 times more return on investment than Origin Agritech. However, Shionogi Co is 2.7 times less risky than Origin Agritech. It trades about 0.06 of its potential returns per unit of risk. Origin Agritech is currently generating about -0.03 per unit of risk. If you would invest  1,270  in Shionogi Co on December 23, 2024 and sell it today you would earn a total of  70.00  from holding Shionogi Co or generate 5.51% return on investment over 90 days.

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

Shionogi Co  vs.  Origin Agritech

Shionogi

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shionogi Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Shionogi 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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Shionogi and Origin Agritech

The main advantage of trading using opposite Shionogi and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shionogi 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 Shionogi Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.