Correlation Between FIRST SHIP and ORMAT TECHNOLOGIES

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Can any of the company-specific risk be diversified away by investing in both FIRST SHIP 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 FIRST SHIP and ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIRST SHIP LEASE and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on FIRST SHIP 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 FIRST SHIP with a short position of ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SHIP and ORMAT TECHNOLOGIES.

Diversification Opportunities for FIRST SHIP and ORMAT TECHNOLOGIES

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between FIRST and ORMAT is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SHIP LEASE and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and FIRST SHIP 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 FIRST SHIP LEASE 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 FIRST SHIP i.e., FIRST SHIP and ORMAT TECHNOLOGIES go up and down completely randomly.

Pair Corralation between FIRST SHIP and ORMAT TECHNOLOGIES

Assuming the 90 days horizon FIRST SHIP is expected to generate 3.12 times less return on investment than ORMAT TECHNOLOGIES. In addition to that, FIRST SHIP is 1.87 times more volatile than ORMAT TECHNOLOGIES. It trades about 0.03 of its total potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about 0.2 per unit of volatility. 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 Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

FIRST SHIP LEASE  vs.  ORMAT TECHNOLOGIES

 Performance 
       Timeline  
FIRST SHIP LEASE 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in FIRST SHIP LEASE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FIRST SHIP may actually be approaching a critical reversion point that can send shares even higher in August 2025.
ORMAT TECHNOLOGIES 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
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.

FIRST SHIP and ORMAT TECHNOLOGIES Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FIRST SHIP and ORMAT TECHNOLOGIES

The main advantage of trading using opposite FIRST SHIP and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SHIP 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's long position.
The idea behind FIRST SHIP LEASE 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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