Correlation Between ORMAT TECHNOLOGIES and Henderson Land

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

By analyzing existing cross correlation between ORMAT TECHNOLOGIES and Henderson Land Development, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and Henderson Land 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 Henderson Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and Henderson Land.

Diversification Opportunities for ORMAT TECHNOLOGIES and Henderson Land

0.84

Correlation Coefficient

ORMAT TECHNOLOGIES  Henderson Land

Very poor diversification

The 3 months correlation between ORMAT and Henderson is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and Henderson Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson Land Devel 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 Henderson Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson Land Devel has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and Henderson Land go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and Henderson Land

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 1.2 times less return on investment than Henderson Land. But when comparing it to its historical volatility, ORMAT TECHNOLOGIES is 1.43 times less risky than Henderson Land. It trades about 0.2 of its potential returns per unit of risk. Henderson Land Development is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  229.00  in Henderson Land Development on April 24, 2025 and sell it today you would earn a total of  59.00  from holding Henderson Land Development or generate 25.76% return on investment over 90 days.

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

ORMAT TECHNOLOGIES  vs.  Henderson Land Development

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ORMAT TECHNOLOGIES are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, ORMAT TECHNOLOGIES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Henderson Land Devel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Henderson Land Development are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Henderson Land reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ORMAT TECHNOLOGIES and Henderson Land

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

The idea behind ORMAT TECHNOLOGIES and Henderson Land Development 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.