Correlation Between ORMAT TECHNOLOGIES and THORNEY TECHS

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

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

Diversification Opportunities for ORMAT TECHNOLOGIES and THORNEY TECHS

-0.08

Correlation Coefficient

ORMAT TECHNOLOGIES  THORNEY TECHS

Good diversification

The 3 months correlation between ORMAT and THORNEY is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and THORNEY TECHS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THORNEY TECHS LTD 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 THORNEY TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THORNEY TECHS LTD has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and THORNEY TECHS go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and THORNEY TECHS

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 68.29 times less return on investment than THORNEY TECHS. But when comparing it to its historical volatility, ORMAT TECHNOLOGIES is 2.38 times less risky than THORNEY TECHS. It trades about 0.0 of its potential returns per unit of risk. THORNEY TECHS LTD is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6.95  in THORNEY TECHS LTD on December 27, 2024 and sell it today you would earn a total of  0.10  from holding THORNEY TECHS LTD or generate 1.44% return on investment over 90 days.

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

ORMAT TECHNOLOGIES  vs.  THORNEY TECHS LTD

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

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.

THORNEY TECHS LTD

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in THORNEY TECHS LTD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, THORNEY TECHS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ORMAT TECHNOLOGIES and THORNEY TECHS

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

The idea behind ORMAT TECHNOLOGIES and THORNEY TECHS LTD 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.