Correlation Between Fastly and OriginClear

Can any of the company-specific risk be diversified away by investing in both Fastly and OriginClear 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 Fastly and OriginClear into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fastly Inc and OriginClear, you can compare the effects of market volatilities on Fastly and OriginClear 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 Fastly with a short position of OriginClear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastly and OriginClear.

Diversification Opportunities for Fastly and OriginClear

0.14

Correlation Coefficient

Fastly  OriginClear

Average diversification

The 3 months correlation between Fastly and OriginClear is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fastly Inc and OriginClear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OriginClear and Fastly 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 Fastly Inc are associated (or correlated) with OriginClear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OriginClear has no effect on the direction of Fastly i.e., Fastly and OriginClear go up and down completely randomly.

Pair Corralation between Fastly and OriginClear

Given the investment horizon of 90 days Fastly Inc is expected to under-perform the OriginClear. But the stock apears to be less risky and, when comparing its historical volatility, Fastly Inc is 2.58 times less risky than OriginClear. The stock trades about -0.12 of its potential returns per unit of risk. The OriginClear is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.28  in OriginClear on December 22, 2024 and sell it today you would lose (0.05) from holding OriginClear or give up 17.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Fastly Inc  vs.  OriginClear

Fastly Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fastly Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

OriginClear

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OriginClear are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, OriginClear displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fastly and OriginClear

The main advantage of trading using opposite Fastly and OriginClear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastly position performs unexpectedly, OriginClear 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 OriginClear will offset losses from the drop in OriginClear's long position.

The idea behind Fastly Inc and OriginClear 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.