Correlation Between Ormat Technologies and Payment Financial
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and Payment Financial 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 Payment Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and Payment Financial Technologies, you can compare the effects of market volatilities on Ormat Technologies and Payment Financial 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 Payment Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and Payment Financial.
Diversification Opportunities for Ormat Technologies and Payment Financial
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ormat and Payment is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Payment Financial Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payment Financial 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 Payment Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payment Financial has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Payment Financial go up and down completely randomly.
Pair Corralation between Ormat Technologies and Payment Financial
Assuming the 90 days trading horizon Ormat Technologies is expected to under-perform the Payment Financial. But the stock apears to be less risky and, when comparing its historical volatility, Ormat Technologies is 4.02 times less risky than Payment Financial. The stock trades about -0.06 of its potential returns per unit of risk. The Payment Financial Technologies is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 25,601 in Payment Financial Technologies on August 30, 2024 and sell it today you would earn a total of 10,529 from holding Payment Financial Technologies or generate 41.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ormat Technologies vs. Payment Financial Technologies
Performance |
| Timeline |
| Ormat Technologies |
| Payment Financial |
Ormat Technologies and Payment Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and Payment Financial
The main advantage of trading using opposite Ormat Technologies and Payment Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, Payment Financial 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 Payment Financial will offset losses from the drop in Payment Financial's long position.| Ormat Technologies vs. Elbit Systems | Ormat Technologies vs. Nice | Ormat Technologies vs. Tower Semiconductor | Ormat Technologies vs. Nova |
| Payment Financial vs. Opal Balance | Payment Financial vs. B Communications | Payment Financial vs. Holmes Place International | Payment Financial vs. Nova |
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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