Correlation Between Ormat Technologies and Elbit Medical

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

By analyzing existing cross correlation between Ormat Technologies and Elbit Medical Technologies, you can compare the effects of market volatilities on Ormat Technologies and Elbit Medical 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 Elbit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and Elbit Medical.

Diversification Opportunities for Ormat Technologies and Elbit Medical

0.86

Correlation Coefficient

Ormat Technologies  Elbit Medical

Very poor diversification

The 3 months correlation between Ormat and Elbit is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Elbit Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Medical Techno 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 Elbit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Medical Techno has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Elbit Medical go up and down completely randomly.

Pair Corralation between Ormat Technologies and Elbit Medical

Assuming the 90 days trading horizon Ormat Technologies is expected to under-perform the Elbit Medical. But the stock apears to be less risky and, when comparing its historical volatility, Ormat Technologies is 2.39 times less risky than Elbit Medical. The stock trades about -0.04 of its potential returns per unit of risk. The Elbit Medical Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,600  in Elbit Medical Technologies on September 14, 2024 and sell it today you would lose (10.00) from holding Elbit Medical Technologies or give up 0.62% of portfolio value over 90 days.

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

Ormat Technologies  vs.  Elbit Medical Technologies

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. Despite somewhat strong basic indicators, Ormat Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Elbit Medical Techno

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Medical Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Elbit Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ormat Technologies and Elbit Medical

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

The idea behind Ormat Technologies and Elbit Medical 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.