Correlation Between ORMAT TECHNOLOGIES and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and Origin Agritech 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 Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and Origin Agritech, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and Origin Agritech 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 Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and Origin Agritech.
Diversification Opportunities for ORMAT TECHNOLOGIES and Origin Agritech
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ORMAT and Origin is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech 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 Origin Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Agritech has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and Origin Agritech go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and Origin Agritech
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 0.81 times more return on investment than Origin Agritech. However, ORMAT TECHNOLOGIES is 1.23 times less risky than Origin Agritech. It trades about -0.26 of its potential returns per unit of risk. Origin Agritech is currently generating about -0.52 per unit of risk. If you would invest 6,894 in ORMAT TECHNOLOGIES on October 16, 2024 and sell it today you would lose (504.00) from holding ORMAT TECHNOLOGIES or give up 7.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
ORMAT TECHNOLOGIES vs. Origin Agritech
Performance |
| Timeline |
| ORMAT TECHNOLOGIES |
| Origin Agritech |
ORMAT TECHNOLOGIES and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORMAT TECHNOLOGIES and Origin Agritech
The main advantage of trading using opposite ORMAT TECHNOLOGIES and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, Origin Agritech 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 Origin Agritech will offset losses from the drop in Origin Agritech's long position.| ORMAT TECHNOLOGIES vs. Sch Environnement SA | ORMAT TECHNOLOGIES vs. NEW MILLENNIUM IRON | ORMAT TECHNOLOGIES vs. Infrastrutture Wireless Italiane | ORMAT TECHNOLOGIES vs. Warner Music Group |
| Origin Agritech vs. MEDCAW INVESTMENTS LS 01 | Origin Agritech vs. CDN IMPERIAL BANK | Origin Agritech vs. Apollo Investment Corp | Origin Agritech vs. Japan Asia Investment |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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