Correlation Between KRISPY KREME and ORMAT TECHNOLOGIES

Can any of the company-specific risk be diversified away by investing in both KRISPY KREME 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 KRISPY KREME and ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KRISPY KREME DL 01 and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on KRISPY KREME 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 KRISPY KREME with a short position of ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and ORMAT TECHNOLOGIES.

Diversification Opportunities for KRISPY KREME and ORMAT TECHNOLOGIES

0.48

Correlation Coefficient

KRISPY KREME  ORMAT TECHNOLOGIES

Very weak diversification

The 3 months correlation between KRISPY and ORMAT is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and KRISPY KREME 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 KRISPY KREME DL 01 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 KRISPY KREME i.e., KRISPY KREME and ORMAT TECHNOLOGIES go up and down completely randomly.

Pair Corralation between KRISPY KREME and ORMAT TECHNOLOGIES

Assuming the 90 days horizon KRISPY KREME DL 01 is expected to under-perform the ORMAT TECHNOLOGIES. In addition to that, KRISPY KREME is 2.55 times more volatile than ORMAT TECHNOLOGIES. It trades about -0.18 of its total potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about -0.13 per unit of volatility. If you would invest  7,696  in ORMAT TECHNOLOGIES on December 3, 2024 and sell it today you would lose (1,072) from holding ORMAT TECHNOLOGIES or give up 13.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

KRISPY KREME DL 01  vs.  ORMAT TECHNOLOGIES

KRISPY KREME DL

Risk-Adjusted Performance

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

Very Weak

Over the last 90 days ORMAT TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with KRISPY KREME and ORMAT TECHNOLOGIES

The main advantage of trading using opposite KRISPY KREME and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRISPY KREME 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.

The idea behind KRISPY KREME DL 01 and ORMAT TECHNOLOGIES pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.