Correlation Between Atlantica Sustainable and Ormat Technologies

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

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

Diversification Opportunities for Atlantica Sustainable and Ormat Technologies

0.0

Correlation Coefficient

Atlantica Sustainable  Ormat Technologies

Pay attention - limited upside

The 3 months correlation between Atlantica and Ormat is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Atlantica Sustainable Infrastr and Ormat Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ormat Technologies and Atlantica Sustainable 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 Atlantica Sustainable Infrastructure 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 Atlantica Sustainable i.e., Atlantica Sustainable and Ormat Technologies go up and down completely randomly.

Pair Corralation between Atlantica Sustainable and Ormat Technologies

If you would invest  6,832  in Ormat Technologies on December 28, 2024 and sell it today you would earn a total of  225.00  from holding Ormat Technologies or generate 3.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Atlantica Sustainable Infrastr  vs.  Ormat Technologies

Atlantica Sustainable

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atlantica Sustainable Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Atlantica Sustainable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ormat Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ormat Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ormat Technologies is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Atlantica Sustainable and Ormat Technologies

The main advantage of trading using opposite Atlantica Sustainable and Ormat Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlantica Sustainable 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 Atlantica Sustainable Infrastructure 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.