Correlation Between THRACE PLASTICS and ORMAT TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both THRACE PLASTICS 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 THRACE PLASTICS and ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THRACE PLASTICS and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on THRACE PLASTICS 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 THRACE PLASTICS with a short position of ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and ORMAT TECHNOLOGIES.
Diversification Opportunities for THRACE PLASTICS and ORMAT TECHNOLOGIES
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between THRACE and ORMAT is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS i.e., THRACE PLASTICS and ORMAT TECHNOLOGIES go up and down completely randomly.
Pair Corralation between THRACE PLASTICS and ORMAT TECHNOLOGIES
Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 0.8 times more return on investment than ORMAT TECHNOLOGIES. However, THRACE PLASTICS is 1.26 times less risky than ORMAT TECHNOLOGIES. It trades about -0.08 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about -0.13 per unit of risk. If you would invest 400.00 in THRACE PLASTICS on September 13, 2024 and sell it today you would lose (8.00) from holding THRACE PLASTICS or give up 2.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
THRACE PLASTICS vs. ORMAT TECHNOLOGIES
Performance |
| Timeline |
| THRACE PLASTICS |
| ORMAT TECHNOLOGIES |
THRACE PLASTICS and ORMAT TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THRACE PLASTICS and ORMAT TECHNOLOGIES
The main advantage of trading using opposite THRACE PLASTICS and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THRACE PLASTICS 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.| THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc |
| ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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