Correlation Between ORMAT TECHNOLOGIES and PRECISION DRILLING
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and PRECISION DRILLING 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 PRECISION DRILLING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and PRECISION DRILLING P, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and PRECISION DRILLING 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 PRECISION DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and PRECISION DRILLING.
Diversification Opportunities for ORMAT TECHNOLOGIES and PRECISION DRILLING
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between ORMAT and PRECISION is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and PRECISION DRILLING P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRECISION DRILLING 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 PRECISION DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRECISION DRILLING has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and PRECISION DRILLING go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and PRECISION DRILLING
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 0.62 times more return on investment than PRECISION DRILLING. However, ORMAT TECHNOLOGIES is 1.62 times less risky than PRECISION DRILLING. It trades about 0.27 of its potential returns per unit of risk. PRECISION DRILLING P is currently generating about 0.15 per unit of risk. If you would invest 7,134 in ORMAT TECHNOLOGIES on September 2, 2024 and sell it today you would earn a total of 586.00 from holding ORMAT TECHNOLOGIES or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ORMAT TECHNOLOGIES vs. PRECISION DRILLING P
Performance |
| Timeline |
| ORMAT TECHNOLOGIES |
| PRECISION DRILLING |
ORMAT TECHNOLOGIES and PRECISION DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORMAT TECHNOLOGIES and PRECISION DRILLING
The main advantage of trading using opposite ORMAT TECHNOLOGIES and PRECISION DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, PRECISION DRILLING 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 PRECISION DRILLING will offset losses from the drop in PRECISION DRILLING'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 |
| PRECISION DRILLING vs. SHELF DRILLING LTD | PRECISION DRILLING vs. Daldrup Shne Aktiengesellschaft | PRECISION DRILLING vs. Superior Plus Corp | PRECISION DRILLING vs. NMI Holdings |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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