Correlation Between Ormat Technologies and NEP Old

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

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

Diversification Opportunities for Ormat Technologies and NEP Old

-0.32

Correlation Coefficient

Ormat Technologies  NEP Old

Very good diversification

The 3 months correlation between Ormat and NEP is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and NEP Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEP Old 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 NEP Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEP Old has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and NEP Old go up and down completely randomly.

Pair Corralation between Ormat Technologies and NEP Old

Considering the 90-day investment horizon Ormat Technologies is expected to generate 0.26 times more return on investment than NEP Old. However, Ormat Technologies is 3.82 times less risky than NEP Old. It trades about 0.03 of its potential returns per unit of risk. NEP Old is currently generating about -0.33 per unit of risk. If you would invest  6,832  in Ormat Technologies on December 28, 2024 and sell it today you would earn a total of  179.00  from holding Ormat Technologies or generate 2.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	38.33%
Values	Daily Returns

Ormat Technologies  vs.  NEP Old

Ormat Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ormat Technologies are ranked lower than 2 (%) 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 newest stock price disturbance, may contribute to short-term losses for the investors.

NEP Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days NEP Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ormat Technologies and NEP Old

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

The idea behind Ormat Technologies and NEP Old 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.