Correlation Between ORMAT TECHNOLOGIES and ASPEN PHARUNADR

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

By analyzing existing cross correlation between ORMAT TECHNOLOGIES and ASPEN PHARUNADR 1, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and ASPEN PHARUNADR 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 ASPEN PHARUNADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and ASPEN PHARUNADR.

Diversification Opportunities for ORMAT TECHNOLOGIES and ASPEN PHARUNADR

-0.25

Correlation Coefficient

ORMAT TECHNOLOGIES  ASPEN PHARUNADR

Very good diversification

The 3 months correlation between ORMAT and ASPEN is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and ASPEN PHARUNADR 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN PHARUNADR 1 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 ASPEN PHARUNADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN PHARUNADR 1 has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and ASPEN PHARUNADR go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and ASPEN PHARUNADR

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to under-perform the ASPEN PHARUNADR. But the stock apears to be less risky and, when comparing its historical volatility, ORMAT TECHNOLOGIES is 1.32 times less risky than ASPEN PHARUNADR. The stock trades about -0.02 of its potential returns per unit of risk. The ASPEN PHARUNADR 1 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  736.00  in ASPEN PHARUNADR 1 on October 9, 2024 and sell it today you would earn a total of  139.00  from holding ASPEN PHARUNADR 1 or generate 18.89% return on investment over 90 days.

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

ORMAT TECHNOLOGIES  vs.  ASPEN PHARUNADR 1

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 comparatively stable basic indicators, ORMAT TECHNOLOGIES is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ASPEN PHARUNADR 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASPEN PHARUNADR 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ORMAT TECHNOLOGIES and ASPEN PHARUNADR

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

The idea behind ORMAT TECHNOLOGIES and ASPEN PHARUNADR 1 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.