Correlation Between Ormat Technologies and Golf

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

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

Diversification Opportunities for Ormat Technologies and Golf

0.75

Correlation Coefficient

Ormat Technologies  Golf

Poor diversification

The 3 months correlation between Ormat and Golf is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Golf Co Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golf Co Group 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 Golf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golf Co Group has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Golf go up and down completely randomly.

Pair Corralation between Ormat Technologies and Golf

Assuming the 90 days trading horizon Ormat Technologies is expected to under-perform the Golf. But the stock apears to be less risky and, when comparing its historical volatility, Ormat Technologies is 2.82 times less risky than Golf. The stock trades about 0.0 of its potential returns per unit of risk. The Golf Co Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  44,880  in Golf Co Group on September 13, 2024 and sell it today you would earn a total of  21,220  from holding Golf Co Group or generate 47.28% return on investment over 90 days.

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

Ormat Technologies  vs.  Golf Co Group

Ormat Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ormat Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Golf Co Group

Risk-Adjusted Performance

25 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Golf Co Group are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Golf sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ormat Technologies and Golf

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

The idea behind Ormat Technologies and Golf Co Group 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.