Correlation Between ORMAT TECHNOLOGIES and ValOre Metals

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

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

Diversification Opportunities for ORMAT TECHNOLOGIES and ValOre Metals

0.13

Correlation Coefficient

ORMAT TECHNOLOGIES  ValOre Metals

Average diversification

The 3 months correlation between ORMAT and ValOre is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and ValOre Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ValOre Metals Corp 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 ValOre Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ValOre Metals Corp has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and ValOre Metals go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and ValOre Metals

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to under-perform the ValOre Metals. But the stock apears to be less risky and, when comparing its historical volatility, ORMAT TECHNOLOGIES is 8.45 times less risky than ValOre Metals. The stock trades about -0.03 of its potential returns per unit of risk. The ValOre Metals Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2.50  in ValOre Metals Corp on September 25, 2024 and sell it today you would earn a total of  4.00  from holding ValOre Metals Corp or generate 160.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

ORMAT TECHNOLOGIES  vs.  ValOre Metals Corp

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

ValOre Metals Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ValOre Metals Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ValOre Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ORMAT TECHNOLOGIES and ValOre Metals

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

The idea behind ORMAT TECHNOLOGIES and ValOre Metals Corp 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.