Correlation Between Ormat Technologies and CHUGOKU EL
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and CHUGOKU EL 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 CHUGOKU EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and CHUGOKU EL PWR, you can compare the effects of market volatilities on Ormat Technologies and CHUGOKU EL 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 CHUGOKU EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and CHUGOKU EL.
Diversification Opportunities for Ormat Technologies and CHUGOKU EL
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ormat and CHUGOKU is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and CHUGOKU EL PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHUGOKU EL PWR 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 CHUGOKU EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHUGOKU EL PWR has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and CHUGOKU EL go up and down completely randomly.
Pair Corralation between Ormat Technologies and CHUGOKU EL
Assuming the 90 days horizon Ormat Technologies is expected to under-perform the CHUGOKU EL. But the stock apears to be less risky and, when comparing its historical volatility, Ormat Technologies is 1.18 times less risky than CHUGOKU EL. The stock trades about -0.25 of its potential returns per unit of risk. The CHUGOKU EL PWR is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 555.00 in CHUGOKU EL PWR on November 2, 2024 and sell it today you would lose (20.00) from holding CHUGOKU EL PWR or give up 3.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ormat Technologies vs. CHUGOKU EL PWR
Performance |
| Timeline |
| Ormat Technologies |
| CHUGOKU EL PWR |
Ormat Technologies and CHUGOKU EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and CHUGOKU EL
The main advantage of trading using opposite Ormat Technologies and CHUGOKU EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, CHUGOKU EL 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 CHUGOKU EL will offset losses from the drop in CHUGOKU EL's long position.| Ormat Technologies vs. Neoen SA | Ormat Technologies vs. Encavis AG | Ormat Technologies vs. TOHOKU EL PWR | Ormat Technologies vs. BEIJJINGNENG CLERGHYC1 |
| CHUGOKU EL vs. Ormat Technologies | CHUGOKU EL vs. Neoen SA | CHUGOKU EL vs. Encavis AG | CHUGOKU EL vs. TOHOKU EL PWR |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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