Correlation Between MA Financial and Origin Energy

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

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

Diversification Opportunities for MA Financial and Origin Energy

-0.26

Correlation Coefficient

MA Financial  Origin Energy

Very good diversification

The 3 months correlation between MAF and Origin is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding MA Financial Group and Origin Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Energy and MA Financial 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 MA Financial Group are associated (or correlated) with Origin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Energy has no effect on the direction of MA Financial i.e., MA Financial and Origin Energy go up and down completely randomly.

Pair Corralation between MA Financial and Origin Energy

Assuming the 90 days trading horizon MA Financial Group is expected to under-perform the Origin Energy. In addition to that, MA Financial is 2.39 times more volatile than Origin Energy. It trades about -0.09 of its total potential returns per unit of risk. Origin Energy is currently generating about 0.13 per unit of volatility. If you would invest  1,066  in Origin Energy on October 8, 2024 and sell it today you would earn a total of  25.00  from holding Origin Energy or generate 2.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

MA Financial Group  vs.  Origin Energy

MA Financial Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MA Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, MA Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Origin Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Origin Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MA Financial and Origin Energy

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

The idea behind MA Financial Group and Origin 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.