Correlation Between Samsung Electronics and ORMAT TECHNOLOGIES

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

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

Diversification Opportunities for Samsung Electronics and ORMAT TECHNOLOGIES

0.55

Correlation Coefficient

Samsung Electronics  ORMAT TECHNOLOGIES

Very weak diversification

The 3 months correlation between Samsung and ORMAT is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and Samsung Electronics 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 Samsung Electronics Co 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 Samsung Electronics i.e., Samsung Electronics and ORMAT TECHNOLOGIES go up and down completely randomly.

Pair Corralation between Samsung Electronics and ORMAT TECHNOLOGIES

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the ORMAT TECHNOLOGIES. In addition to that, Samsung Electronics is 1.18 times more volatile than ORMAT TECHNOLOGIES. It trades about -0.01 of its total potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about -0.01 per unit of volatility. If you would invest  7,713  in ORMAT TECHNOLOGIES on December 4, 2024 and sell it today you would lose (1,105) from holding ORMAT TECHNOLOGIES or give up 14.33% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  ORMAT TECHNOLOGIES

Samsung Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Samsung Electronics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the 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 Samsung Electronics and ORMAT TECHNOLOGIES

The main advantage of trading using opposite Samsung Electronics and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics 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 Samsung Electronics Co 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.