Correlation Between Origin Materials and Launch One

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

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

Diversification Opportunities for Origin Materials and Launch One

0.32

Correlation Coefficient

Origin Materials  Launch One

Weak diversification

The 3 months correlation between Origin and Launch is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials and Launch One Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Launch One Acquisition and Origin Materials 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 Materials are associated (or correlated) with Launch One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Launch One Acquisition has no effect on the direction of Origin Materials i.e., Origin Materials and Launch One go up and down completely randomly.

Pair Corralation between Origin Materials and Launch One

Given the investment horizon of 90 days Origin Materials is expected to under-perform the Launch One. But the stock apears to be less risky and, when comparing its historical volatility, Origin Materials is 2.23 times less risky than Launch One. The stock trades about -0.01 of its potential returns per unit of risk. The Launch One Acquisition is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Launch One Acquisition on October 11, 2024 and sell it today you would earn a total of  6.00  from holding Launch One Acquisition or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	10.91%
Values	Daily Returns

Origin Materials  vs.  Launch One Acquisition

Origin Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Origin Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Launch One Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Launch One Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Launch One showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Origin Materials and Launch One

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

The idea behind Origin Materials and Launch One Acquisition 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.