Correlation Between AppHarvest and Origin Materials
Can any of the company-specific risk be diversified away by investing in both AppHarvest and Origin Materials 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 AppHarvest and Origin Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AppHarvest and Origin Materials Warrant, you can compare the effects of market volatilities on AppHarvest and Origin Materials 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 AppHarvest with a short position of Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of AppHarvest and Origin Materials.
Diversification Opportunities for AppHarvest and Origin Materials
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AppHarvest and Origin is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding AppHarvest and Origin Materials Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials Warrant and AppHarvest 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 AppHarvest are associated (or correlated) with Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials Warrant has no effect on the direction of AppHarvest i.e., AppHarvest and Origin Materials go up and down completely randomly.
Pair Corralation between AppHarvest and Origin Materials
If you would invest 9.00 in Origin Materials Warrant on September 2, 2024 and sell it today you would earn a total of 3.00 from holding Origin Materials Warrant or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
AppHarvest vs. Origin Materials Warrant
Performance |
| Timeline |
| AppHarvest |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Origin Materials Warrant |
AppHarvest and Origin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AppHarvest and Origin Materials
The main advantage of trading using opposite AppHarvest and Origin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AppHarvest position performs unexpectedly, Origin Materials 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 Materials will offset losses from the drop in Origin Materials' long position.The idea behind AppHarvest and Origin Materials Warrant 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.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 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..
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