Correlation Between AIB Group and Origin Enterprises

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

By analyzing existing cross correlation between AIB Group PLC and Origin Enterprises Plc, you can compare the effects of market volatilities on AIB Group and Origin Enterprises 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 AIB Group with a short position of Origin Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIB Group and Origin Enterprises.

Diversification Opportunities for AIB Group and Origin Enterprises

-0.5

Correlation Coefficient

AIB Group  Origin Enterprises

Very good diversification

The 3 months correlation between AIB and Origin is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding AIB Group PLC and Origin Enterprises Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Enterprises Plc and AIB Group 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 AIB Group PLC are associated (or correlated) with Origin Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Enterprises Plc has no effect on the direction of AIB Group i.e., AIB Group and Origin Enterprises go up and down completely randomly.

Pair Corralation between AIB Group and Origin Enterprises

Assuming the 90 days trading horizon AIB Group PLC is expected to generate 0.87 times more return on investment than Origin Enterprises. However, AIB Group PLC is 1.15 times less risky than Origin Enterprises. It trades about 0.09 of its potential returns per unit of risk. Origin Enterprises Plc is currently generating about -0.15 per unit of risk. If you would invest  485.00  in AIB Group PLC on October 1, 2024 and sell it today you would earn a total of  44.00  from holding AIB Group PLC or generate 9.07% return on investment over 90 days.

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

AIB Group PLC  vs.  Origin Enterprises Plc

AIB Group PLC

Risk-Adjusted Performance

7 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AIB Group PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, AIB Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Origin Enterprises Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Origin Enterprises Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with AIB Group and Origin Enterprises

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

The idea behind AIB Group PLC and Origin Enterprises Plc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..