Correlation Between Eltek and Coupang LLC

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

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

Diversification Opportunities for Eltek and Coupang LLC

-0.37

Correlation Coefficient

Eltek  Coupang LLC

Very good diversification

The 3 months correlation between Eltek and Coupang is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and Eltek 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 Eltek are associated (or correlated) with Coupang LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coupang LLC has no effect on the direction of Eltek i.e., Eltek and Coupang LLC go up and down completely randomly.

Pair Corralation between Eltek and Coupang LLC

Given the investment horizon of 90 days Eltek is expected to generate 1.34 times more return on investment than Coupang LLC. However, Eltek is 1.34 times more volatile than Coupang LLC. It trades about 0.17 of its potential returns per unit of risk. Coupang LLC is currently generating about -0.15 per unit of risk. If you would invest  1,061  in Eltek on October 10, 2024 and sell it today you would earn a total of  72.00  from holding Eltek or generate 6.79% return on investment over 90 days.

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

Eltek  vs.  Coupang LLC

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 inconsistent basic indicators, Eltek may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Coupang LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coupang LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Eltek and Coupang LLC

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

The idea behind Eltek and Coupang LLC 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.