Correlation Between Ormat Technologies and Altshuler Shaham

Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and Altshuler Shaham 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 Altshuler Shaham into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ormat Technologies and Altshuler Shaham Financial, you can compare the effects of market volatilities on Ormat Technologies and Altshuler Shaham 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 Altshuler Shaham. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and Altshuler Shaham.

Diversification Opportunities for Ormat Technologies and Altshuler Shaham

0.8

Correlation Coefficient

Ormat Technologies  Altshuler Shaham

Very poor diversification

The 3 months correlation between Ormat and Altshuler is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Altshuler Shaham Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altshuler Shaham Fin 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 Altshuler Shaham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altshuler Shaham Fin has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Altshuler Shaham go up and down completely randomly.

Pair Corralation between Ormat Technologies and Altshuler Shaham

Assuming the 90 days trading horizon Ormat Technologies is expected to under-perform the Altshuler Shaham. But the stock apears to be less risky and, when comparing its historical volatility, Ormat Technologies is 1.45 times less risky than Altshuler Shaham. The stock trades about -0.04 of its potential returns per unit of risk. The Altshuler Shaham Financial is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  50,030  in Altshuler Shaham Financial on September 14, 2024 and sell it today you would earn a total of  12,560  from holding Altshuler Shaham Financial or generate 25.1% return on investment over 90 days.

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

Ormat Technologies  vs.  Altshuler Shaham Financial

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. Despite somewhat strong basic indicators, Ormat Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Altshuler Shaham Fin

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altshuler Shaham Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Altshuler Shaham sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ormat Technologies and Altshuler Shaham

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

The idea behind Ormat Technologies and Altshuler Shaham Financial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.