Correlation Between Enlight Corp and Altek Corp

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

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

Diversification Opportunities for Enlight Corp and Altek Corp

0.28

Correlation Coefficient

Enlight Corp  Altek Corp

Modest diversification

The 3 months correlation between Enlight and Altek is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Corp and Altek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altek Corp and Enlight Corp 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 Enlight Corp are associated (or correlated) with Altek Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altek Corp has no effect on the direction of Enlight Corp i.e., Enlight Corp and Altek Corp go up and down completely randomly.

Pair Corralation between Enlight Corp and Altek Corp

Assuming the 90 days trading horizon Enlight Corp is expected to generate 1.44 times more return on investment than Altek Corp. However, Enlight Corp is 1.44 times more volatile than Altek Corp. It trades about 0.09 of its potential returns per unit of risk. Altek Corp is currently generating about 0.05 per unit of risk. If you would invest  3,165  in Enlight Corp on December 30, 2024 and sell it today you would earn a total of  545.00  from holding Enlight Corp or generate 17.22% return on investment over 90 days.

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

Enlight Corp  vs.  Altek Corp

Enlight Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enlight Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Enlight Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Altek Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Altek Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Altek Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Enlight Corp and Altek Corp

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

The idea behind Enlight Corp and Altek Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.