Correlation Between ORMAT TECHNOLOGIES and China Communications
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and China Communications 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 ORMAT TECHNOLOGIES and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and China Communications Services, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and China Communications 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 ORMAT TECHNOLOGIES with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and China Communications.
Diversification Opportunities for ORMAT TECHNOLOGIES and China Communications
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ORMAT and China is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and China Communications go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and China Communications
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to under-perform the China Communications. But the stock apears to be less risky and, when comparing its historical volatility, ORMAT TECHNOLOGIES is 3.63 times less risky than China Communications. The stock trades about -0.01 of its potential returns per unit of risk. The China Communications Services is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 11.00 in China Communications Services on December 4, 2024 and sell it today you would earn a total of 45.00 from holding China Communications Services or generate 409.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
ORMAT TECHNOLOGIES vs. China Communications Services
Performance |
| Timeline |
| ORMAT TECHNOLOGIES |
| China Communications |
ORMAT TECHNOLOGIES and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORMAT TECHNOLOGIES and China Communications
The main advantage of trading using opposite ORMAT TECHNOLOGIES and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, China Communications 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 China Communications will offset losses from the drop in China Communications' long position.| ORMAT TECHNOLOGIES vs. Compugroup Medical SE | ORMAT TECHNOLOGIES vs. Sch Environnement SA | ORMAT TECHNOLOGIES vs. PULSION Medical Systems | ORMAT TECHNOLOGIES vs. Japan Medical Dynamic |
| China Communications vs. FONIX MOBILE PLC | China Communications vs. GAMING FAC SA | China Communications vs. GAMESTOP | China Communications vs. Boyd Gaming |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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