Correlation Between Origin Energy and MOL PLC

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

By analyzing existing cross correlation between Origin Energy Ltd and MOL PLC ADR, you can compare the effects of market volatilities on Origin Energy and MOL PLC 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 MOL PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Energy and MOL PLC.

Diversification Opportunities for Origin Energy and MOL PLC

-0.33

Correlation Coefficient

Origin Energy  MOL PLC

Very good diversification

The 3 months correlation between Origin and MOL is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Origin Energy Ltd and MOL PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOL PLC ADR 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 Ltd are associated (or correlated) with MOL PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOL PLC ADR has no effect on the direction of Origin Energy i.e., Origin Energy and MOL PLC go up and down completely randomly.

Pair Corralation between Origin Energy and MOL PLC

Assuming the 90 days horizon Origin Energy is expected to generate 20.48 times less return on investment than MOL PLC. In addition to that, Origin Energy is 1.01 times more volatile than MOL PLC ADR. It trades about 0.01 of its total potential returns per unit of risk. MOL PLC ADR is currently generating about 0.15 per unit of volatility. If you would invest  348.00  in MOL PLC ADR on December 27, 2024 and sell it today you would earn a total of  71.00  from holding MOL PLC ADR or generate 20.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Origin Energy Ltd  vs.  MOL PLC ADR

Origin Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Origin Energy Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Origin Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MOL PLC ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MOL PLC ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, MOL PLC showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Origin Energy and MOL PLC

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

The idea behind Origin Energy Ltd and MOL PLC ADR 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.