Correlation Between Ormat Technologies and EnviTec Biogas
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and EnviTec Biogas 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 EnviTec Biogas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and EnviTec Biogas AG, you can compare the effects of market volatilities on Ormat Technologies and EnviTec Biogas 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 EnviTec Biogas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and EnviTec Biogas.
Diversification Opportunities for Ormat Technologies and EnviTec Biogas
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ormat and EnviTec is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and EnviTec Biogas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnviTec Biogas AG 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 EnviTec Biogas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnviTec Biogas AG has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and EnviTec Biogas go up and down completely randomly.
Pair Corralation between Ormat Technologies and EnviTec Biogas
Assuming the 90 days horizon Ormat Technologies is expected to generate 0.58 times more return on investment than EnviTec Biogas. However, Ormat Technologies is 1.72 times less risky than EnviTec Biogas. It trades about 0.0 of its potential returns per unit of risk. EnviTec Biogas AG is currently generating about 0.0 per unit of risk. If you would invest 8,163 in Ormat Technologies on September 12, 2024 and sell it today you would lose (731.00) from holding Ormat Technologies or give up 8.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ormat Technologies vs. EnviTec Biogas AG
Performance |
| Timeline |
| Ormat Technologies |
| EnviTec Biogas AG |
Ormat Technologies and EnviTec Biogas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and EnviTec Biogas
The main advantage of trading using opposite Ormat Technologies and EnviTec Biogas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, EnviTec Biogas 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 EnviTec Biogas will offset losses from the drop in EnviTec Biogas' long position.| Ormat Technologies vs. VERBUND AG ADR | Ormat Technologies vs. TOHOKU EL PWR | Ormat Technologies vs. BEIJJINGNENG CLERGHYC1 | Ormat Technologies vs. EnviTec Biogas AG |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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