Correlation Between ORMAT TECHNOLOGIES and HK Electric
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and HK Electric 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 HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and HK Electric Investments, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and HK Electric 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 HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and HK Electric.
Diversification Opportunities for ORMAT TECHNOLOGIES and HK Electric
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ORMAT and HKT is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and HK Electric Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HK Electric Investments 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 HK Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HK Electric Investments has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and HK Electric go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and HK Electric
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 55.81 times less return on investment than HK Electric. But when comparing it to its historical volatility, ORMAT TECHNOLOGIES is 2.03 times less risky than HK Electric. It trades about 0.0 of its potential returns per unit of risk. HK Electric Investments is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 18.00 in HK Electric Investments on September 2, 2024 and sell it today you would earn a total of 44.00 from holding HK Electric Investments or generate 244.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ORMAT TECHNOLOGIES vs. HK Electric Investments
Performance |
| Timeline |
| ORMAT TECHNOLOGIES |
| HK Electric Investments |
ORMAT TECHNOLOGIES and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORMAT TECHNOLOGIES and HK Electric
The main advantage of trading using opposite ORMAT TECHNOLOGIES and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, HK Electric 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 HK Electric will offset losses from the drop in HK Electric's long position.| ORMAT TECHNOLOGIES vs. SIVERS SEMICONDUCTORS AB | ORMAT TECHNOLOGIES vs. Darden Restaurants | ORMAT TECHNOLOGIES vs. Reliance Steel Aluminum | ORMAT TECHNOLOGIES vs. Q2M Managementberatung AG |
| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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