Correlation Between Origin Agritech and Ryerson Holding

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

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

Diversification Opportunities for Origin Agritech and Ryerson Holding

-0.11

Correlation Coefficient

Origin Agritech  Ryerson Holding

Good diversification

The 3 months correlation between Origin and Ryerson is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Ryerson Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryerson Holding 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 Ryerson Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryerson Holding has no effect on the direction of Origin Agritech i.e., Origin Agritech and Ryerson Holding go up and down completely randomly.

Pair Corralation between Origin Agritech and Ryerson Holding

Assuming the 90 days trading horizon Origin Agritech is expected to under-perform the Ryerson Holding. In addition to that, Origin Agritech is 2.12 times more volatile than Ryerson Holding. It trades about -0.01 of its total potential returns per unit of risk. Ryerson Holding is currently generating about 0.01 per unit of volatility. If you would invest  2,737  in Ryerson Holding on September 4, 2024 and sell it today you would lose (317.00) from holding Ryerson Holding or give up 11.58% of portfolio value over 90 days.

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

Origin Agritech  vs.  Ryerson Holding

Origin Agritech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Agritech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Origin Agritech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ryerson Holding

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ryerson Holding are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ryerson Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Origin Agritech and Ryerson Holding

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

The idea behind Origin Agritech and Ryerson Holding 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.