Correlation Between NVIDIA and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both NVIDIA 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 NVIDIA and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Origin Agritech, you can compare the effects of market volatilities on NVIDIA 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 NVIDIA with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Origin Agritech.
Diversification Opportunities for NVIDIA and Origin Agritech
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NVIDIA and Origin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and NVIDIA 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 NVIDIA 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 NVIDIA i.e., NVIDIA and Origin Agritech go up and down completely randomly.
Pair Corralation between NVIDIA and Origin Agritech
Given the investment horizon of 90 days NVIDIA is expected to under-perform the Origin Agritech. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 1.43 times less risky than Origin Agritech. The stock trades about -0.24 of its potential returns per unit of risk. The Origin Agritech is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 348.00 in Origin Agritech on January 20, 2024 and sell it today you would lose (31.00) from holding Origin Agritech or give up 8.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Origin Agritech
Performance |
| Timeline |
| NVIDIA |
| Origin Agritech |
NVIDIA and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Origin Agritech
The main advantage of trading using opposite NVIDIA and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA 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.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Origin Agritech vs. Benson Hill | Origin Agritech vs. Corteva | Origin Agritech vs. Scotts Miracle Gro | Origin Agritech vs. Yara International ASA |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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