Correlation Between ORMAT TECHNOLOGIES and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and JAPAN TOBACCO 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 JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and JAPAN TOBACCO 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 JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and JAPAN TOBACCO.
Diversification Opportunities for ORMAT TECHNOLOGIES and JAPAN TOBACCO
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ORMAT and JAPAN is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and JAPAN TOBACCO
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 0.92 times more return on investment than JAPAN TOBACCO. However, ORMAT TECHNOLOGIES is 1.09 times less risky than JAPAN TOBACCO. It trades about 0.06 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.04 per unit of risk. If you would invest 6,309 in ORMAT TECHNOLOGIES on August 31, 2024 and sell it today you would earn a total of 1,403 from holding ORMAT TECHNOLOGIES or generate 22.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ORMAT TECHNOLOGIES vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| ORMAT TECHNOLOGIES |
| JAPAN TOBACCO UNSPADR12 |
ORMAT TECHNOLOGIES and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORMAT TECHNOLOGIES and JAPAN TOBACCO
The main advantage of trading using opposite ORMAT TECHNOLOGIES and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, JAPAN TOBACCO 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 JAPAN TOBACCO will offset losses from the drop in JAPAN TOBACCO'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 |
| JAPAN TOBACCO vs. Titan Machinery | JAPAN TOBACCO vs. Federal Agricultural Mortgage | JAPAN TOBACCO vs. HYDROFARM HLD GRP | JAPAN TOBACCO vs. Autohome ADR |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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