Correlation Between PT Bank and ORMAT TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both PT Bank 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 PT Bank and ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bank Rakyat and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on PT Bank 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 PT Bank with a short position of ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and ORMAT TECHNOLOGIES.
Diversification Opportunities for PT Bank and ORMAT TECHNOLOGIES
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BYRA and ORMAT is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and PT Bank 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 PT Bank Rakyat 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 PT Bank i.e., PT Bank and ORMAT TECHNOLOGIES go up and down completely randomly.
Pair Corralation between PT Bank and ORMAT TECHNOLOGIES
Assuming the 90 days trading horizon PT Bank Rakyat is expected to generate 3.47 times more return on investment than ORMAT TECHNOLOGIES. However, PT Bank is 3.47 times more volatile than ORMAT TECHNOLOGIES. It trades about 0.03 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about 0.06 per unit of risk. If you would invest 25.00 in PT Bank Rakyat on August 27, 2024 and sell it today you would earn a total of 0.00 from holding PT Bank Rakyat or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. ORMAT TECHNOLOGIES
Performance |
| Timeline |
| PT Bank Rakyat |
| ORMAT TECHNOLOGIES |
PT Bank and ORMAT TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and ORMAT TECHNOLOGIES
The main advantage of trading using opposite PT Bank and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank 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.The idea behind PT Bank Rakyat and ORMAT TECHNOLOGIES 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.| ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Microsoft |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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