Correlation Between Ormat Technologies and Insuline Medical

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

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

Diversification Opportunities for Ormat Technologies and Insuline Medical

0.58

Correlation Coefficient

Ormat Technologies  Insuline Medical

Very weak diversification

The 3 months correlation between Ormat and Insuline is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Insuline Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insuline Medical 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 Insuline Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insuline Medical has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Insuline Medical go up and down completely randomly.

Pair Corralation between Ormat Technologies and Insuline Medical

Assuming the 90 days trading horizon Ormat Technologies is expected to generate 6.26 times less return on investment than Insuline Medical. But when comparing it to its historical volatility, Ormat Technologies is 3.95 times less risky than Insuline Medical. It trades about 0.06 of its potential returns per unit of risk. Insuline Medical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  19,600  in Insuline Medical on December 30, 2024 and sell it today you would earn a total of  4,780  from holding Insuline Medical or generate 24.39% return on investment over 90 days.

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

Ormat Technologies  vs.  Insuline Medical

Ormat Technologies

Risk-Adjusted Performance

Insignificant

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

Insuline Medical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Insuline Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Insuline Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ormat Technologies and Insuline Medical

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

The idea behind Ormat Technologies and Insuline Medical 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.