Correlation Between Origin Materials and Suntory Beverage

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

By analyzing existing cross correlation between Origin Materials and Suntory Beverage Food, you can compare the effects of market volatilities on Origin Materials and Suntory Beverage 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 Suntory Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and Suntory Beverage.

Diversification Opportunities for Origin Materials and Suntory Beverage

0.75

Correlation Coefficient

Origin Materials  Suntory Beverage

Poor diversification

The 3 months correlation between Origin and Suntory is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials and Suntory Beverage Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntory Beverage Food 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 Suntory Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntory Beverage Food has no effect on the direction of Origin Materials i.e., Origin Materials and Suntory Beverage go up and down completely randomly.

Pair Corralation between Origin Materials and Suntory Beverage

Given the investment horizon of 90 days Origin Materials is expected to generate 3.8 times more return on investment than Suntory Beverage. However, Origin Materials is 3.8 times more volatile than Suntory Beverage Food. It trades about 0.09 of its potential returns per unit of risk. Suntory Beverage Food is currently generating about -0.02 per unit of risk. If you would invest  62.00  in Origin Materials on October 9, 2024 and sell it today you would earn a total of  61.00  from holding Origin Materials or generate 98.39% return on investment over 90 days.

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

Origin Materials  vs.  Suntory Beverage Food

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 latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Suntory Beverage Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suntory Beverage Food 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 fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Origin Materials and Suntory Beverage

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

The idea behind Origin Materials and Suntory Beverage Food 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 Stocks Directory module to find actively traded stocks across global markets.