Correlation Between DDC Enterprise and Eltek

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

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

Diversification Opportunities for DDC Enterprise and Eltek

-0.55

Correlation Coefficient

DDC Enterprise  Eltek

Excellent diversification

The 3 months correlation between DDC and Eltek is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding DDC Enterprise Limited and Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eltek and DDC Enterprise 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 DDC Enterprise Limited are associated (or correlated) with Eltek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eltek has no effect on the direction of DDC Enterprise i.e., DDC Enterprise and Eltek go up and down completely randomly.

Pair Corralation between DDC Enterprise and Eltek

Considering the 90-day investment horizon DDC Enterprise Limited is expected to under-perform the Eltek. In addition to that, DDC Enterprise is 2.79 times more volatile than Eltek. It trades about -0.08 of its total potential returns per unit of risk. Eltek is currently generating about 0.04 per unit of volatility. If you would invest  1,057  in Eltek on October 6, 2024 and sell it today you would earn a total of  45.00  from holding Eltek or generate 4.26% return on investment over 90 days.

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

DDC Enterprise Limited  vs.  Eltek

DDC Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DDC Enterprise Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Eltek

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eltek are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Eltek is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with DDC Enterprise and Eltek

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

The idea behind DDC Enterprise Limited and Eltek 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.