Correlation Between Bioceres Crop and Origin Agritech

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

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

Diversification Opportunities for Bioceres Crop and Origin Agritech

-0.69

Correlation Coefficient

Bioceres Crop  Origin Agritech

Excellent diversification

The 3 months correlation between Bioceres and Origin is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bioceres Crop Solutions and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and Bioceres Crop 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 Bioceres Crop Solutions 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 Bioceres Crop i.e., Bioceres Crop and Origin Agritech go up and down completely randomly.

Pair Corralation between Bioceres Crop and Origin Agritech

Given the investment horizon of 90 days Bioceres Crop Solutions is expected to generate 0.38 times more return on investment than Origin Agritech. However, Bioceres Crop Solutions is 2.64 times less risky than Origin Agritech. It trades about 0.01 of its potential returns per unit of risk. Origin Agritech is currently generating about -0.02 per unit of risk. If you would invest  1,255  in Bioceres Crop Solutions on January 19, 2024 and sell it today you would lose (32.00) from holding Bioceres Crop Solutions or give up 2.55% of portfolio value over 90 days.

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

Bioceres Crop Solutions  vs.  Origin Agritech

Bioceres Crop Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bioceres Crop Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Origin Agritech

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Agritech are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Origin Agritech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bioceres Crop and Origin Agritech

The main advantage of trading using opposite Bioceres Crop and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bioceres Crop 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 Bioceres Crop Solutions 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.