Correlation Between Ormat Technologies and CVD Equipment

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

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

Diversification Opportunities for Ormat Technologies and CVD Equipment

0.62

Correlation Coefficient

Ormat Technologies  CVD Equipment

Poor diversification

The 3 months correlation between Ormat and CVD is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and CVD Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVD Equipment 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 CVD Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVD Equipment has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and CVD Equipment go up and down completely randomly.

Pair Corralation between Ormat Technologies and CVD Equipment

Considering the 90-day investment horizon Ormat Technologies is expected to generate 1.59 times less return on investment than CVD Equipment. But when comparing it to its historical volatility, Ormat Technologies is 3.22 times less risky than CVD Equipment. It trades about 0.23 of its potential returns per unit of risk. CVD Equipment is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  272.00  in CVD Equipment on May 6, 2025 and sell it today you would earn a total of  84.00  from holding CVD Equipment or generate 30.88% 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.  CVD Equipment

Ormat Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ormat Technologies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Ormat Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

CVD Equipment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVD Equipment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, CVD Equipment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ormat Technologies and CVD Equipment

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

The idea behind Ormat Technologies and CVD Equipment 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.