Correlation Between Holmes Place and Ormat Technologies

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

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

Diversification Opportunities for Holmes Place and Ormat Technologies

-0.48

Correlation Coefficient

Holmes Place  Ormat Technologies

Very good diversification

The 3 months correlation between Holmes and Ormat is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Holmes Place International and Ormat Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ormat Technologies and Holmes Place 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 Holmes Place International 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 Holmes Place i.e., Holmes Place and Ormat Technologies go up and down completely randomly.

Pair Corralation between Holmes Place and Ormat Technologies

Assuming the 90 days trading horizon Holmes Place International is expected to generate 0.99 times more return on investment than Ormat Technologies. However, Holmes Place International is 1.01 times less risky than Ormat Technologies. It trades about 0.22 of its potential returns per unit of risk. Ormat Technologies is currently generating about 0.06 per unit of risk. If you would invest  53,190  in Holmes Place International on December 30, 2024 and sell it today you would earn a total of  11,430  from holding Holmes Place International or generate 21.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Holmes Place International  vs.  Ormat Technologies

Holmes Place Interna

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Holmes Place International are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Holmes Place sustained solid returns over the last few months and may actually be approaching a breakup point.

Ormat Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ormat Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ormat Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Holmes Place and Ormat Technologies

The main advantage of trading using opposite Holmes Place and Ormat Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmes Place 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 Holmes Place International 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.