Correlation Between Nanjing Panda and ORMAT TECHNOLOGIES

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

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

Diversification Opportunities for Nanjing Panda and ORMAT TECHNOLOGIES

0.16

Correlation Coefficient

Nanjing Panda  ORMAT TECHNOLOGIES

Average diversification

The 3 months correlation between Nanjing and ORMAT is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Panda Electronics and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and Nanjing Panda 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 Nanjing Panda Electronics 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 Nanjing Panda i.e., Nanjing Panda and ORMAT TECHNOLOGIES go up and down completely randomly.

Pair Corralation between Nanjing Panda and ORMAT TECHNOLOGIES

If you would invest  33.00  in Nanjing Panda Electronics on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Nanjing Panda Electronics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	88.89%
Values	Daily Returns

Nanjing Panda Electronics  vs.  ORMAT TECHNOLOGIES

Nanjing Panda Electronics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Panda Electronics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nanjing Panda reported solid returns over the last few months and may actually be approaching a breakup point.

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

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 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.

Pair Trading with Nanjing Panda and ORMAT TECHNOLOGIES

The main advantage of trading using opposite Nanjing Panda and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanjing Panda 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 Nanjing Panda Electronics 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.