Correlation Between Huntsman and Origin Materials
Can any of the company-specific risk be diversified away by investing in both Huntsman 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 Huntsman and Origin Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntsman and Origin Materials, you can compare the effects of market volatilities on Huntsman 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 Huntsman with a short position of Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntsman and Origin Materials.
Diversification Opportunities for Huntsman and Origin Materials
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Huntsman and Origin is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Huntsman and Origin Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials and Huntsman 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 Huntsman 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 has no effect on the direction of Huntsman i.e., Huntsman and Origin Materials go up and down completely randomly.
Pair Corralation between Huntsman and Origin Materials
Considering the 90-day investment horizon Huntsman is expected to generate 1.01 times more return on investment than Origin Materials. However, Huntsman is 1.01 times more volatile than Origin Materials. It trades about -0.12 of its potential returns per unit of risk. Origin Materials is currently generating about -0.59 per unit of risk. If you would invest 1,787 in Huntsman on November 18, 2024 and sell it today you would lose (88.00) from holding Huntsman or give up 4.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huntsman vs. Origin Materials
Performance |
| Timeline |
| Huntsman |
| Origin Materials |
Huntsman and Origin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huntsman and Origin Materials
The main advantage of trading using opposite Huntsman and Origin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntsman 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.| Huntsman vs. Valhi Inc | Huntsman vs. Lsb Industries | Huntsman vs. Westlake Chemical Partners | Huntsman vs. Braskem SA Class |
| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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