Correlation Between Ormat Technologies and Value Capital
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and Value Capital 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 Value Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and Value Capital One, you can compare the effects of market volatilities on Ormat Technologies and Value Capital 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 Value Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and Value Capital.
Diversification Opportunities for Ormat Technologies and Value Capital
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ormat and Value is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Value Capital One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Capital One 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 Value Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Capital One has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Value Capital go up and down completely randomly.
Pair Corralation between Ormat Technologies and Value Capital
Assuming the 90 days trading horizon Ormat Technologies is expected to generate 0.44 times more return on investment than Value Capital. However, Ormat Technologies is 2.3 times less risky than Value Capital. It trades about 0.11 of its potential returns per unit of risk. Value Capital One is currently generating about -0.11 per unit of risk. If you would invest 2,382,908 in Ormat Technologies on September 3, 2024 and sell it today you would earn a total of 567,092 from holding Ormat Technologies or generate 23.8% 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. Value Capital One
Performance |
| Timeline |
| Ormat Technologies |
| Value Capital One |
Ormat Technologies and Value Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and Value Capital
The main advantage of trading using opposite Ormat Technologies and Value Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, Value Capital 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 Value Capital will offset losses from the drop in Value Capital's long position.| Ormat Technologies vs. Elbit Systems | Ormat Technologies vs. Nice | Ormat Technologies vs. Tower Semiconductor | Ormat Technologies vs. Nova |
| Value Capital vs. Bezeq Israeli Telecommunication | Value Capital vs. Batm Advanced Communications | Value Capital vs. Arad Investment Industrial | Value Capital vs. Oron Group Investments |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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