Correlation Between ORMAT TECHNOLOGIES and Canadian Solar

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

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

Diversification Opportunities for ORMAT TECHNOLOGIES and Canadian Solar

-0.55

Correlation Coefficient

ORMAT TECHNOLOGIES  Canadian Solar

Excellent diversification

The 3 months correlation between ORMAT and Canadian is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and Canadian Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Solar 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 Canadian Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Solar has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and Canadian Solar go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and Canadian Solar

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 0.25 times more return on investment than Canadian Solar. However, ORMAT TECHNOLOGIES is 3.96 times less risky than Canadian Solar. It trades about 0.09 of its potential returns per unit of risk. Canadian Solar is currently generating about 0.02 per unit of risk. If you would invest  6,709  in ORMAT TECHNOLOGIES on September 14, 2024 and sell it today you would earn a total of  553.00  from holding ORMAT TECHNOLOGIES or generate 8.24% return on investment over 90 days.

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

ORMAT TECHNOLOGIES  vs.  Canadian Solar

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ORMAT TECHNOLOGIES are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ORMAT TECHNOLOGIES may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Canadian Solar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Solar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Canadian Solar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ORMAT TECHNOLOGIES and Canadian Solar

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

The idea behind ORMAT TECHNOLOGIES and Canadian Solar 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..