Correlation Between Ormat Technologies and Ocean Thermal

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

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

Diversification Opportunities for Ormat Technologies and Ocean Thermal

0.09

Correlation Coefficient

Ormat Technologies  Ocean Thermal

Significant diversification

The 3 months correlation between Ormat and Ocean is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Ocean Thermal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Thermal Energy 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 Ocean Thermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Thermal Energy has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Ocean Thermal go up and down completely randomly.

Pair Corralation between Ormat Technologies and Ocean Thermal

If you would invest  7,261  in Ormat Technologies on August 31, 2024 and sell it today you would earn a total of  901.00  from holding Ormat Technologies or generate 12.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Ormat Technologies  vs.  Ocean Thermal Energy

Ormat Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ormat Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Ormat Technologies may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Ocean Thermal Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocean Thermal Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ocean Thermal is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ormat Technologies and Ocean Thermal

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

The idea behind Ormat Technologies and Ocean Thermal Energy 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.