Correlation Between Origin Materials and Arq

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

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

Diversification Opportunities for Origin Materials and Arq

-0.04

Correlation Coefficient

Origin Materials  Arq

Good diversification

The 3 months correlation between Origin and Arq is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials Warrant and Arq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arq Inc 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 Warrant are associated (or correlated) with Arq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arq Inc has no effect on the direction of Origin Materials i.e., Origin Materials and Arq go up and down completely randomly.

Pair Corralation between Origin Materials and Arq

Assuming the 90 days horizon Origin Materials Warrant is expected to generate 6.37 times more return on investment than Arq. However, Origin Materials is 6.37 times more volatile than Arq Inc. It trades about 0.03 of its potential returns per unit of risk. Arq Inc is currently generating about -0.26 per unit of risk. If you would invest  10.00  in Origin Materials Warrant on September 25, 2024 and sell it today you would lose (1.00) from holding Origin Materials Warrant or give up 10.0% of portfolio value over 90 days.

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

Origin Materials Warrant  vs.  Arq Inc

Origin Materials Warrant

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Materials Warrant are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Origin Materials showed solid returns over the last few months and may actually be approaching a breakup point.

Arq Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arq Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Arq reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Origin Materials and Arq

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

The idea behind Origin Materials Warrant and Arq Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.