Correlation Between Victory Supermarket and Ormat Technologies

Can any of the company-specific risk be diversified away by investing in both Victory Supermarket 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 Victory Supermarket and Ormat Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Victory Supermarket Chain and Ormat Technologies, you can compare the effects of market volatilities on Victory Supermarket 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 Victory Supermarket with a short position of Ormat Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Supermarket and Ormat Technologies.

Diversification Opportunities for Victory Supermarket and Ormat Technologies

-0.37

Correlation Coefficient

Victory Supermarket  Ormat Technologies

Very good diversification

The 3 months correlation between Victory and Ormat is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Victory Supermarket Chain and Ormat Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ormat Technologies and Victory Supermarket 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 Victory Supermarket Chain 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 Victory Supermarket i.e., Victory Supermarket and Ormat Technologies go up and down completely randomly.

Pair Corralation between Victory Supermarket and Ormat Technologies

Assuming the 90 days trading horizon Victory Supermarket Chain is expected to under-perform the Ormat Technologies. In addition to that, Victory Supermarket is 1.1 times more volatile than Ormat Technologies. It trades about -0.25 of its total potential returns per unit of risk. Ormat Technologies is currently generating about 0.06 per unit of volatility. If you would invest  2,461,883  in Ormat Technologies on December 30, 2024 and sell it today you would earn a total of  118,117  from holding Ormat Technologies or generate 4.8% return on investment over 90 days.

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

Victory Supermarket Chain  vs.  Ormat Technologies

Victory Supermarket Chain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Supermarket Chain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ormat Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ormat Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ormat Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Victory Supermarket and Ormat Technologies

The main advantage of trading using opposite Victory Supermarket and Ormat Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Supermarket 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' long position.

The idea behind Victory Supermarket Chain 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.