Correlation Between Ormat Technologies and Biomedix Incubator
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and Biomedix Incubator 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 Biomedix Incubator into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and Biomedix Incubator, you can compare the effects of market volatilities on Ormat Technologies and Biomedix Incubator 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 Biomedix Incubator. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and Biomedix Incubator.
Diversification Opportunities for Ormat Technologies and Biomedix Incubator
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ormat and Biomedix is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Biomedix Incubator in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomedix Incubator 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 Biomedix Incubator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomedix Incubator has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Biomedix Incubator go up and down completely randomly.
Pair Corralation between Ormat Technologies and Biomedix Incubator
Assuming the 90 days trading horizon Ormat Technologies is expected to generate 114.23 times less return on investment than Biomedix Incubator. But when comparing it to its historical volatility, Ormat Technologies is 3.51 times less risky than Biomedix Incubator. It trades about 0.0 of its potential returns per unit of risk. Biomedix Incubator is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 356,400 in Biomedix Incubator on August 26, 2024 and sell it today you would earn a total of 1,563,600 from holding Biomedix Incubator or generate 438.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ormat Technologies vs. Biomedix Incubator
Performance |
| Timeline |
| Ormat Technologies |
| Biomedix Incubator |
Ormat Technologies and Biomedix Incubator Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and Biomedix Incubator
The main advantage of trading using opposite Ormat Technologies and Biomedix Incubator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, Biomedix Incubator 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 Biomedix Incubator will offset losses from the drop in Biomedix Incubator's long position.| Ormat Technologies vs. Elbit Systems | Ormat Technologies vs. Nice | Ormat Technologies vs. Tower Semiconductor | Ormat Technologies vs. Nova |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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