Correlation Between Eltek and LGL

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

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

Diversification Opportunities for Eltek and LGL

0.0

Correlation Coefficient

Eltek  LGL

Pay attention - limited upside

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

Pair Corralation between Eltek and LGL

Given the investment horizon of 90 days Eltek is expected to generate 1.14 times less return on investment than LGL. But when comparing it to its historical volatility, Eltek is 1.39 times less risky than LGL. It trades about 0.02 of its potential returns per unit of risk. LGL Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  611.00  in LGL Group on September 16, 2024 and sell it today you would earn a total of  5.00  from holding LGL Group or generate 0.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Eltek  vs.  LGL Group

Eltek

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eltek are ranked lower than 1 (%) 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 latest stock price mess, may contribute to short-term losses for the institutional investors.

LGL Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LGL Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, LGL is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Eltek and LGL

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

The idea behind Eltek and LGL 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.