Correlation Between ORMAT TECHNOLOGIES and Murata Manufacturing

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

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

Diversification Opportunities for ORMAT TECHNOLOGIES and Murata Manufacturing

-0.5

Correlation Coefficient

ORMAT TECHNOLOGIES  Murata Manufacturing

Very good diversification

The 3 months correlation between ORMAT and Murata is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and Murata Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murata Manufacturing 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 Murata Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murata Manufacturing has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and Murata Manufacturing go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and Murata Manufacturing

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 0.82 times more return on investment than Murata Manufacturing. However, ORMAT TECHNOLOGIES is 1.22 times less risky than Murata Manufacturing. It trades about 0.2 of its potential returns per unit of risk. Murata Manufacturing Co is currently generating about -0.04 per unit of risk. If you would invest  6,292  in ORMAT TECHNOLOGIES on April 24, 2025 and sell it today you would earn a total of  1,376  from holding ORMAT TECHNOLOGIES or generate 21.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

ORMAT TECHNOLOGIES  vs.  Murata Manufacturing Co

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.

Murata Manufacturing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Murata Manufacturing Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Murata Manufacturing is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ORMAT TECHNOLOGIES and Murata Manufacturing

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

The idea behind ORMAT TECHNOLOGIES and Murata Manufacturing Co 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.