Correlation Between PRECISION DRILLING and ORMAT TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both PRECISION DRILLING and ORMAT TECHNOLOGIES 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 PRECISION DRILLING and ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PRECISION DRILLING P and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on PRECISION DRILLING and ORMAT TECHNOLOGIES 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 PRECISION DRILLING with a short position of ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRECISION DRILLING and ORMAT TECHNOLOGIES.
Diversification Opportunities for PRECISION DRILLING and ORMAT TECHNOLOGIES
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between PRECISION and ORMAT is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and PRECISION DRILLING 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 PRECISION DRILLING P are associated (or correlated) with ORMAT TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORMAT TECHNOLOGIES has no effect on the direction of PRECISION DRILLING i.e., PRECISION DRILLING and ORMAT TECHNOLOGIES go up and down completely randomly.
Pair Corralation between PRECISION DRILLING and ORMAT TECHNOLOGIES
Assuming the 90 days trading horizon PRECISION DRILLING is expected to generate 1.07 times less return on investment than ORMAT TECHNOLOGIES. In addition to that, PRECISION DRILLING is 1.62 times more volatile than ORMAT TECHNOLOGIES. It trades about 0.15 of its total potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about 0.27 per unit of volatility. If you would invest 7,134 in ORMAT TECHNOLOGIES on September 2, 2024 and sell it today you would earn a total of 586.00 from holding ORMAT TECHNOLOGIES or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PRECISION DRILLING P vs. ORMAT TECHNOLOGIES
Performance |
| Timeline |
| PRECISION DRILLING |
| ORMAT TECHNOLOGIES |
PRECISION DRILLING and ORMAT TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PRECISION DRILLING and ORMAT TECHNOLOGIES
The main advantage of trading using opposite PRECISION DRILLING and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PRECISION DRILLING position performs unexpectedly, ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES will offset losses from the drop in ORMAT TECHNOLOGIES's long position.| PRECISION DRILLING vs. SHELF DRILLING LTD | PRECISION DRILLING vs. Daldrup Shne Aktiengesellschaft | PRECISION DRILLING vs. Superior Plus Corp | PRECISION DRILLING vs. NMI Holdings |
| ORMAT TECHNOLOGIES vs. SIVERS SEMICONDUCTORS AB | ORMAT TECHNOLOGIES vs. Darden Restaurants | ORMAT TECHNOLOGIES vs. Reliance Steel Aluminum | ORMAT TECHNOLOGIES vs. Q2M Managementberatung AG |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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