Correlation Between Origin Materials and AST SpaceMobile

Can any of the company-specific risk be diversified away by investing in both Origin Materials and AST SpaceMobile 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 AST SpaceMobile 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 AST SpaceMobile, you can compare the effects of market volatilities on Origin Materials and AST SpaceMobile 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 AST SpaceMobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and AST SpaceMobile.

Diversification Opportunities for Origin Materials and AST SpaceMobile

-0.54

Correlation Coefficient

Origin Materials  AST SpaceMobile

Excellent diversification

The 3 months correlation between Origin and AST is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials Warrant and AST SpaceMobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AST SpaceMobile 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 AST SpaceMobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AST SpaceMobile has no effect on the direction of Origin Materials i.e., Origin Materials and AST SpaceMobile go up and down completely randomly.

Pair Corralation between Origin Materials and AST SpaceMobile

Assuming the 90 days horizon Origin Materials Warrant is expected to generate 1.09 times more return on investment than AST SpaceMobile. However, Origin Materials is 1.09 times more volatile than AST SpaceMobile. It trades about 0.08 of its potential returns per unit of risk. AST SpaceMobile is currently generating about -0.07 per unit of risk. If you would invest  9.50  in Origin Materials Warrant on August 31, 2024 and sell it today you would earn a total of  1.50  from holding Origin Materials Warrant or generate 15.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	31.75%
Values	Daily Returns

Origin Materials Warrant  vs.  AST SpaceMobile

Origin Materials Warrant

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Materials Warrant are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Origin Materials showed solid returns over the last few months and may actually be approaching a breakup point.

AST SpaceMobile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AST SpaceMobile has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Origin Materials and AST SpaceMobile

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

The idea behind Origin Materials Warrant and AST SpaceMobile 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.