Correlation Between Ormat Technologies and Tokyo Electric
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and Tokyo Electric 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 Tokyo Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and Tokyo Electric Power, you can compare the effects of market volatilities on Ormat Technologies and Tokyo Electric 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 Tokyo Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and Tokyo Electric.
Diversification Opportunities for Ormat Technologies and Tokyo Electric
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ormat and Tokyo is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Tokyo Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electric Power 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 Tokyo Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electric Power has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Tokyo Electric go up and down completely randomly.
Pair Corralation between Ormat Technologies and Tokyo Electric
Considering the 90-day investment horizon Ormat Technologies is expected to under-perform the Tokyo Electric. But the stock apears to be less risky and, when comparing its historical volatility, Ormat Technologies is 3.27 times less risky than Tokyo Electric. The stock trades about -0.21 of its potential returns per unit of risk. The Tokyo Electric Power is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 275.00 in Tokyo Electric Power on October 25, 2024 and sell it today you would lose (10.00) from holding Tokyo Electric Power or give up 3.64% 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. Tokyo Electric Power
Performance |
| Timeline |
| Ormat Technologies |
| Tokyo Electric Power |
Ormat Technologies and Tokyo Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and Tokyo Electric
The main advantage of trading using opposite Ormat Technologies and Tokyo Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, Tokyo Electric 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 Tokyo Electric will offset losses from the drop in Tokyo Electric's long position.| Ormat Technologies vs. Altus Power | Ormat Technologies vs. Enlight Renewable Energy | Ormat Technologies vs. Fluence Energy | Ormat Technologies vs. Clearway Energy |
| Tokyo Electric vs. Alternus Energy Group | Tokyo Electric vs. First National Energy | Tokyo Electric vs. Brookfield Renewable Partners |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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