Correlation Between ORMAT TECHNOLOGIES and Graham Holdings

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

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

Diversification Opportunities for ORMAT TECHNOLOGIES and Graham Holdings

-0.36

Correlation Coefficient

ORMAT TECHNOLOGIES  Graham Holdings

Very good diversification

The 3 months correlation between ORMAT and Graham is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and Graham Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings 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 Graham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and Graham Holdings go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and Graham Holdings

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 3.43 times less return on investment than Graham Holdings. But when comparing it to its historical volatility, ORMAT TECHNOLOGIES is 1.09 times less risky than Graham Holdings. It trades about 0.02 of its potential returns per unit of risk. Graham Holdings Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  83,831  in Graham Holdings Co on December 23, 2024 and sell it today you would earn a total of  4,669  from holding Graham Holdings Co or generate 5.57% 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.  Graham Holdings Co

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ORMAT TECHNOLOGIES are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ORMAT TECHNOLOGIES is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Graham Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Graham Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ORMAT TECHNOLOGIES and Graham Holdings

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

The idea behind ORMAT TECHNOLOGIES and Graham Holdings Co 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.