Correlation Between ORMAT TECHNOLOGIES and SIEM OFFSHORE

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

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

Diversification Opportunities for ORMAT TECHNOLOGIES and SIEM OFFSHORE

0.25

Correlation Coefficient

ORMAT TECHNOLOGIES  SIEM OFFSHORE

Modest diversification

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

Pair Corralation between ORMAT TECHNOLOGIES and SIEM OFFSHORE

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 0.8 times more return on investment than SIEM OFFSHORE. However, ORMAT TECHNOLOGIES is 1.26 times less risky than SIEM OFFSHORE. It trades about -0.47 of its potential returns per unit of risk. SIEM OFFSHORE NEW is currently generating about -0.47 per unit of risk. If you would invest  7,712  in ORMAT TECHNOLOGIES on September 29, 2024 and sell it today you would lose (1,128) from holding ORMAT TECHNOLOGIES or give up 14.63% of portfolio value over 90 days.

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

ORMAT TECHNOLOGIES  vs.  SIEM OFFSHORE NEW

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.

SIEM OFFSHORE NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIEM OFFSHORE NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical 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 SIEM OFFSHORE

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

The idea behind ORMAT TECHNOLOGIES and SIEM OFFSHORE NEW 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.