Correlation Between Advanced Braking and Origin Energy
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Origin Energy 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 Advanced Braking and Origin Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Braking Technology and Origin Energy, you can compare the effects of market volatilities on Advanced Braking and Origin Energy 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 Advanced Braking with a short position of Origin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Origin Energy.
Diversification Opportunities for Advanced Braking and Origin Energy
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Advanced and Origin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Origin Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Energy and Advanced Braking 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 Advanced Braking Technology are associated (or correlated) with Origin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Energy has no effect on the direction of Advanced Braking i.e., Advanced Braking and Origin Energy go up and down completely randomly.
Pair Corralation between Advanced Braking and Origin Energy
Assuming the 90 days trading horizon Advanced Braking Technology is expected to under-perform the Origin Energy. In addition to that, Advanced Braking is 2.71 times more volatile than Origin Energy. It trades about -0.03 of its total potential returns per unit of risk. Origin Energy is currently generating about 0.54 per unit of volatility. If you would invest 963.00 in Origin Energy on September 1, 2024 and sell it today you would earn a total of 124.00 from holding Origin Energy or generate 12.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Advanced Braking Technology vs. Origin Energy
Performance |
| Timeline |
| Advanced Braking Tec |
| Origin Energy |
Advanced Braking and Origin Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Braking and Origin Energy
The main advantage of trading using opposite Advanced Braking and Origin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, Origin Energy 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 Energy will offset losses from the drop in Origin Energy's long position.| Advanced Braking vs. Encounter Resources | Advanced Braking vs. Tlou Energy | Advanced Braking vs. Southern Cross Gold | Advanced Braking vs. Minbos Resources |
| Origin Energy vs. Aurelia Metals | Origin Energy vs. Advanced Braking Technology | Origin Energy vs. Richmond Vanadium Technology | Origin Energy vs. Ainsworth Game Technology |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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