Correlation Between Origin Energy and Odyssey Energy

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Can any of the company-specific risk be diversified away by investing in both Origin Energy and Odyssey 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 Origin Energy and Odyssey Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Energy and Odyssey Energy, you can compare the effects of market volatilities on Origin Energy and Odyssey 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 Origin Energy with a short position of Odyssey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Energy and Odyssey Energy.

Diversification Opportunities for Origin Energy and Odyssey Energy

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Origin and Odyssey is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Origin Energy and Odyssey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssey Energy 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 Odyssey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssey Energy has no effect on the direction of Origin Energy i.e., Origin Energy and Odyssey Energy go up and down completely randomly.

Pair Corralation between Origin Energy and Odyssey Energy

Assuming the 90 days trading horizon Origin Energy is expected to generate 0.23 times more return on investment than Odyssey Energy. However, Origin Energy is 4.39 times less risky than Odyssey Energy. It trades about 0.07 of its potential returns per unit of risk. Odyssey Energy is currently generating about 0.0 per unit of risk. If you would invest  709.00  in Origin Energy on August 29, 2024 and sell it today you would earn a total of  360.00  from holding Origin Energy or generate 50.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Origin Energy  vs.  Odyssey Energy

 Performance 
       Timeline  
Origin Energy 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Origin Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Origin Energy may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Odyssey Energy 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Odyssey Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Odyssey Energy may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Origin Energy and Odyssey Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Origin Energy and Odyssey Energy

The main advantage of trading using opposite Origin Energy and Odyssey Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Energy position performs unexpectedly, Odyssey 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 Odyssey Energy will offset losses from the drop in Odyssey Energy's long position.
The idea behind Origin Energy and Odyssey Energy 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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