Correlation Between Origin Agritech and Corteva

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

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

Diversification Opportunities for Origin Agritech and Corteva

-0.06

Correlation Coefficient

Origin Agritech  Corteva

Good diversification

The 3 months correlation between Origin and Corteva is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Origin Agritech and Corteva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corteva 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 Corteva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corteva has no effect on the direction of Origin Agritech i.e., Origin Agritech and Corteva go up and down completely randomly.

Pair Corralation between Origin Agritech and Corteva

Given the investment horizon of 90 days Origin Agritech is expected to under-perform the Corteva. In addition to that, Origin Agritech is 2.42 times more volatile than Corteva. It trades about -0.03 of its total potential returns per unit of risk. Corteva is currently generating about 0.06 per unit of volatility. If you would invest  5,836  in Corteva on September 12, 2024 and sell it today you would earn a total of  143.00  from holding Corteva or generate 2.45% return on investment over 90 days.

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

Origin Agritech  vs.  Corteva

Origin Agritech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Agritech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Corteva

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Corteva are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Corteva may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Origin Agritech and Corteva

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

The idea behind Origin Agritech and Corteva 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..