Correlation Between Eltek and GE Vernova

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

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

Diversification Opportunities for Eltek and GE Vernova

0.43

Correlation Coefficient

Eltek  GE Vernova

Very weak diversification

The 3 months correlation between Eltek and GEV is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova 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 GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of Eltek i.e., Eltek and GE Vernova go up and down completely randomly.

Pair Corralation between Eltek and GE Vernova

Given the investment horizon of 90 days Eltek is expected to under-perform the GE Vernova. But the stock apears to be less risky and, when comparing its historical volatility, Eltek is 1.31 times less risky than GE Vernova. The stock trades about -0.07 of its potential returns per unit of risk. The GE Vernova LLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  31,688  in GE Vernova LLC on December 18, 2024 and sell it today you would earn a total of  1,508  from holding GE Vernova LLC or generate 4.76% return on investment over 90 days.

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

Eltek  vs.  GE Vernova LLC

Eltek

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eltek has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

GE Vernova LLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, GE Vernova may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eltek and GE Vernova

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

The idea behind Eltek and GE Vernova 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.