Correlation Between Ram On and Ormat Technologies

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

By analyzing existing cross correlation between Ram On Investments and and Ormat Technologies, you can compare the effects of market volatilities on Ram On and Ormat Technologies 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 Ram On with a short position of Ormat Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ram On and Ormat Technologies.

Diversification Opportunities for Ram On and Ormat Technologies

-0.61

Correlation Coefficient

Ram On  Ormat Technologies

Excellent diversification

The 3 months correlation between Ram and Ormat is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ram On Investments and and Ormat Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ormat Technologies and Ram On 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 Ram On Investments and are associated (or correlated) with Ormat Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ormat Technologies has no effect on the direction of Ram On i.e., Ram On and Ormat Technologies go up and down completely randomly.

Pair Corralation between Ram On and Ormat Technologies

Assuming the 90 days trading horizon Ram On Investments and is expected to under-perform the Ormat Technologies. In addition to that, Ram On is 1.09 times more volatile than Ormat Technologies. It trades about -0.07 of its total potential returns per unit of risk. Ormat Technologies is currently generating about 0.06 per unit of volatility. If you would invest  2,461,883  in Ormat Technologies on December 29, 2024 and sell it today you would earn a total of  118,117  from holding Ormat Technologies or generate 4.8% return on investment over 90 days.

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

Ram On Investments and  vs.  Ormat Technologies

Ram On Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ram On Investments and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with Ram On and Ormat Technologies

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

The idea behind Ram On Investments and and Ormat Technologies 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.