Correlation Between Sumitomo Rubber and ORMAT TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Sumitomo Rubber and ORMAT TECHNOLOGIES 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 Sumitomo Rubber and ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Rubber Industries and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on Sumitomo Rubber and ORMAT TECHNOLOGIES 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 Sumitomo Rubber with a short position of ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Rubber and ORMAT TECHNOLOGIES.
Diversification Opportunities for Sumitomo Rubber and ORMAT TECHNOLOGIES
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sumitomo and ORMAT is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Rubber Industries and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and Sumitomo Rubber 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 Sumitomo Rubber Industries are associated (or correlated) with ORMAT TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORMAT TECHNOLOGIES has no effect on the direction of Sumitomo Rubber i.e., Sumitomo Rubber and ORMAT TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Sumitomo Rubber and ORMAT TECHNOLOGIES
Assuming the 90 days horizon Sumitomo Rubber Industries is expected to generate 1.08 times more return on investment than ORMAT TECHNOLOGIES. However, Sumitomo Rubber is 1.08 times more volatile than ORMAT TECHNOLOGIES. It trades about 0.1 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about -0.13 per unit of risk. If you would invest 1,020 in Sumitomo Rubber Industries on September 13, 2024 and sell it today you would earn a total of 30.00 from holding Sumitomo Rubber Industries or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Rubber Industries vs. ORMAT TECHNOLOGIES
Performance |
| Timeline |
| Sumitomo Rubber Indu |
| ORMAT TECHNOLOGIES |
Sumitomo Rubber and ORMAT TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Rubber and ORMAT TECHNOLOGIES
The main advantage of trading using opposite Sumitomo Rubber and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Rubber position performs unexpectedly, ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES will offset losses from the drop in ORMAT TECHNOLOGIES's long position.| Sumitomo Rubber vs. Superior Plus Corp | Sumitomo Rubber vs. NMI Holdings | Sumitomo Rubber vs. SIVERS SEMICONDUCTORS AB | Sumitomo Rubber vs. NorAm Drilling AS |
| ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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