Correlation Between ORMAT TECHNOLOGIES and POLENERGIA

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

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

Diversification Opportunities for ORMAT TECHNOLOGIES and POLENERGIA

0.18

Correlation Coefficient

ORMAT TECHNOLOGIES  POLENERGIA

Average diversification

The 3 months correlation between ORMAT and POLENERGIA is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and POLENERGIA SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POLENERGIA SA ZY 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 POLENERGIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POLENERGIA SA ZY has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and POLENERGIA go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and POLENERGIA

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to under-perform the POLENERGIA. But the stock apears to be less risky and, when comparing its historical volatility, ORMAT TECHNOLOGIES is 1.18 times less risky than POLENERGIA. The stock trades about -0.03 of its potential returns per unit of risk. The POLENERGIA SA ZY is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,620  in POLENERGIA SA ZY on September 30, 2024 and sell it today you would lose (20.00) from holding POLENERGIA SA ZY or give up 1.23% of portfolio value over 90 days.

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

ORMAT TECHNOLOGIES  vs.  POLENERGIA SA ZY

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.

POLENERGIA SA ZY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days POLENERGIA SA ZY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, POLENERGIA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ORMAT TECHNOLOGIES and POLENERGIA

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

The idea behind ORMAT TECHNOLOGIES and POLENERGIA SA ZY 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.