Correlation Between Eltek and GEN Restaurant

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

By analyzing existing cross correlation between Eltek and GEN Restaurant Group,, you can compare the effects of market volatilities on Eltek and GEN Restaurant 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 GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eltek and GEN Restaurant.

Diversification Opportunities for Eltek and GEN Restaurant

0.0

Correlation Coefficient

Eltek  GEN Restaurant

Pay attention - limited upside

The 3 months correlation between Eltek and GEN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Eltek i.e., Eltek and GEN Restaurant go up and down completely randomly.

Pair Corralation between Eltek and GEN Restaurant

Given the investment horizon of 90 days Eltek is expected to generate 0.65 times more return on investment than GEN Restaurant. However, Eltek is 1.54 times less risky than GEN Restaurant. It trades about 0.03 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.04 per unit of risk. If you would invest  1,060  in Eltek on October 3, 2024 and sell it today you would earn a total of  46.00  from holding Eltek or generate 4.34% return on investment over 90 days.

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

Eltek  vs.  GEN Restaurant Group,

Eltek

Risk-Adjusted Performance

4 of 100

Insignificant

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

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Eltek and GEN Restaurant

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

The idea behind Eltek and GEN Restaurant Group, 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.