Correlation Between Ormat Technologies and Orsted A/S
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and Orsted A/S 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 Orsted A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and Orsted AS, you can compare the effects of market volatilities on Ormat Technologies and Orsted A/S 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 Orsted A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and Orsted A/S.
Diversification Opportunities for Ormat Technologies and Orsted A/S
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ormat and Orsted is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Orsted AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted A/S 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 Orsted A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted A/S has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Orsted A/S go up and down completely randomly.
Pair Corralation between Ormat Technologies and Orsted A/S
Considering the 90-day investment horizon Ormat Technologies is expected to generate 0.4 times more return on investment than Orsted A/S. However, Ormat Technologies is 2.49 times less risky than Orsted A/S. It trades about -0.21 of its potential returns per unit of risk. Orsted AS is currently generating about -0.26 per unit of risk. If you would invest 7,025 in Ormat Technologies on October 25, 2024 and sell it today you would lose (473.00) from holding Ormat Technologies or give up 6.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Ormat Technologies vs. Orsted AS
Performance |
| Timeline |
| Ormat Technologies |
| Orsted A/S |
Ormat Technologies and Orsted A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and Orsted A/S
The main advantage of trading using opposite Ormat Technologies and Orsted A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, Orsted A/S 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 Orsted A/S will offset losses from the drop in Orsted A/S's long position.| Ormat Technologies vs. Altus Power | Ormat Technologies vs. Enlight Renewable Energy | Ormat Technologies vs. Fluence Energy | Ormat Technologies vs. Clearway Energy |
| Orsted A/S vs. Innergex Renewable Energy | Orsted A/S vs. Clearway Energy | Orsted A/S vs. Fusion Fuel Green | Orsted A/S vs. Powertap Hydrogen Capital |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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