Correlation Between ORMAT TECHNOLOGIES and Materialise

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

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

Diversification Opportunities for ORMAT TECHNOLOGIES and Materialise

-0.29

Correlation Coefficient

ORMAT TECHNOLOGIES  Materialise

Very good diversification

The 3 months correlation between ORMAT and Materialise is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV 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 Materialise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materialise NV has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and Materialise go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and Materialise

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to under-perform the Materialise. But the stock apears to be less risky and, when comparing its historical volatility, ORMAT TECHNOLOGIES is 1.94 times less risky than Materialise. The stock trades about -0.03 of its potential returns per unit of risk. The Materialise NV is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,020  in Materialise NV on October 24, 2024 and sell it today you would lose (275.00) from holding Materialise NV or give up 26.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

ORMAT TECHNOLOGIES  vs.  Materialise NV

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 latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Materialise NV

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ORMAT TECHNOLOGIES and Materialise

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

The idea behind ORMAT TECHNOLOGIES and Materialise NV 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.