Correlation Between ORMAT TECHNOLOGIES and Idemitsu Kosan
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and Idemitsu Kosan 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 Idemitsu Kosan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and Idemitsu Kosan CoLtd, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and Idemitsu Kosan 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 Idemitsu Kosan. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and Idemitsu Kosan.
Diversification Opportunities for ORMAT TECHNOLOGIES and Idemitsu Kosan
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ORMAT and Idemitsu is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and Idemitsu Kosan CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idemitsu Kosan CoLtd 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 Idemitsu Kosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idemitsu Kosan CoLtd has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and Idemitsu Kosan go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and Idemitsu Kosan
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 5.89 times less return on investment than Idemitsu Kosan. But when comparing it to its historical volatility, ORMAT TECHNOLOGIES is 1.03 times less risky than Idemitsu Kosan. It trades about 0.02 of its potential returns per unit of risk. Idemitsu Kosan CoLtd is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 616.00 in Idemitsu Kosan CoLtd on December 29, 2024 and sell it today you would earn a total of 59.00 from holding Idemitsu Kosan CoLtd or generate 9.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ORMAT TECHNOLOGIES vs. Idemitsu Kosan CoLtd
Performance |
Timeline |
ORMAT TECHNOLOGIES |
Idemitsu Kosan CoLtd |
ORMAT TECHNOLOGIES and Idemitsu Kosan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ORMAT TECHNOLOGIES and Idemitsu Kosan
The main advantage of trading using opposite ORMAT TECHNOLOGIES and Idemitsu Kosan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, Idemitsu Kosan 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 Idemitsu Kosan will offset losses from the drop in Idemitsu Kosan's long position.ORMAT TECHNOLOGIES vs. ELMOS SEMICONDUCTOR | ORMAT TECHNOLOGIES vs. CONTAGIOUS GAMING INC | ORMAT TECHNOLOGIES vs. MagnaChip Semiconductor Corp | ORMAT TECHNOLOGIES vs. BE Semiconductor Industries |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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