Correlation Between ORMAT TECHNOLOGIES and ADYEN NV

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

By analyzing existing cross correlation between ORMAT TECHNOLOGIES and ADYEN NV UNSPADR001, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and ADYEN NV 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 ADYEN NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and ADYEN NV.

Diversification Opportunities for ORMAT TECHNOLOGIES and ADYEN NV

-0.06

Correlation Coefficient

ORMAT TECHNOLOGIES  ADYEN NV

Good diversification

The 3 months correlation between ORMAT and ADYEN is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and ADYEN NV UNSPADR001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADYEN NV UNSPADR001 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 ADYEN NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADYEN NV UNSPADR001 has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and ADYEN NV go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and ADYEN NV

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 2.19 times less return on investment than ADYEN NV. But when comparing it to its historical volatility, ORMAT TECHNOLOGIES is 2.23 times less risky than ADYEN NV. It trades about 0.09 of its potential returns per unit of risk. ADYEN NV UNSPADR001 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,250  in ADYEN NV UNSPADR001 on September 14, 2024 and sell it today you would earn a total of  210.00  from holding ADYEN NV UNSPADR001 or generate 16.8% return on investment over 90 days.

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

ORMAT TECHNOLOGIES  vs.  ADYEN NV UNSPADR001

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ORMAT TECHNOLOGIES are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ORMAT TECHNOLOGIES may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ADYEN NV UNSPADR001

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADYEN NV UNSPADR001 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ADYEN NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ORMAT TECHNOLOGIES and ADYEN NV

The main advantage of trading using opposite ORMAT TECHNOLOGIES and ADYEN NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, ADYEN NV 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 ADYEN NV will offset losses from the drop in ADYEN NV's long position.

The idea behind ORMAT TECHNOLOGIES and ADYEN NV UNSPADR001 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.