Correlation Between ORMAT TECHNOLOGIES and Kering SA

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

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

Diversification Opportunities for ORMAT TECHNOLOGIES and Kering SA

-0.4

Correlation Coefficient

ORMAT TECHNOLOGIES  Kering SA

Very good diversification

The 3 months correlation between ORMAT and Kering is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA 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 Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and Kering SA go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and Kering SA

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 0.56 times more return on investment than Kering SA. However, ORMAT TECHNOLOGIES is 1.79 times less risky than Kering SA. It trades about 0.02 of its potential returns per unit of risk. Kering SA is currently generating about -0.04 per unit of risk. If you would invest  6,513  in ORMAT TECHNOLOGIES on December 21, 2024 and sell it today you would earn a total of  107.00  from holding ORMAT TECHNOLOGIES or generate 1.64% return on investment over 90 days.

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

ORMAT TECHNOLOGIES  vs.  Kering SA

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ORMAT TECHNOLOGIES are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ORMAT TECHNOLOGIES is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Kering SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kering SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ORMAT TECHNOLOGIES and Kering SA

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

The idea behind ORMAT TECHNOLOGIES and Kering SA 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 Global Correlations module to find global opportunities by holding instruments from different markets.