Correlation Between Origin Energy and Adriatic Metals
Can any of the company-specific risk be diversified away by investing in both Origin Energy and Adriatic Metals 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 Origin Energy and Adriatic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Energy and Adriatic Metals Plc, you can compare the effects of market volatilities on Origin Energy and Adriatic Metals 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 Origin Energy with a short position of Adriatic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Energy and Adriatic Metals.
Diversification Opportunities for Origin Energy and Adriatic Metals
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Origin and Adriatic is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Origin Energy and Adriatic Metals Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriatic Metals Plc and Origin Energy 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 Origin Energy are associated (or correlated) with Adriatic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriatic Metals Plc has no effect on the direction of Origin Energy i.e., Origin Energy and Adriatic Metals go up and down completely randomly.
Pair Corralation between Origin Energy and Adriatic Metals
Assuming the 90 days trading horizon Origin Energy is expected to generate 0.38 times more return on investment than Adriatic Metals. However, Origin Energy is 2.61 times less risky than Adriatic Metals. It trades about 0.42 of its potential returns per unit of risk. Adriatic Metals Plc is currently generating about 0.02 per unit of risk. If you would invest 967.00 in Origin Energy on August 28, 2024 and sell it today you would earn a total of 102.00 from holding Origin Energy or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Energy vs. Adriatic Metals Plc
Performance |
| Timeline |
| Origin Energy |
| Adriatic Metals Plc |
Origin Energy and Adriatic Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Energy and Adriatic Metals
The main advantage of trading using opposite Origin Energy and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Energy position performs unexpectedly, Adriatic Metals 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 Adriatic Metals will offset losses from the drop in Adriatic Metals' long position.| Origin Energy vs. Westpac Banking | Origin Energy vs. ABACUS STORAGE KING | Origin Energy vs. Odyssey Energy | Origin Energy vs. Objective Corp |
| Adriatic Metals vs. Northern Star Resources | Adriatic Metals vs. Evolution Mining | Adriatic Metals vs. Bluescope Steel | Adriatic Metals vs. Sandfire Resources NL |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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