Correlation Between Eltek and 04685A2N0

Can any of the company-specific risk be diversified away by investing in both Eltek and 04685A2N0 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 04685A2N0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eltek and US04685A2N06, you can compare the effects of market volatilities on Eltek and 04685A2N0 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 04685A2N0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eltek and 04685A2N0.

Diversification Opportunities for Eltek and 04685A2N0

0.35

Correlation Coefficient

Eltek  04685A2N0

Weak diversification

The 3 months correlation between Eltek and 04685A2N0 is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and US04685A2N06 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US04685A2N06 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 04685A2N0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US04685A2N06 has no effect on the direction of Eltek i.e., Eltek and 04685A2N0 go up and down completely randomly.

Pair Corralation between Eltek and 04685A2N0

Given the investment horizon of 90 days Eltek is expected to generate 2.37 times more return on investment than 04685A2N0. However, Eltek is 2.37 times more volatile than US04685A2N06. It trades about 0.07 of its potential returns per unit of risk. US04685A2N06 is currently generating about 0.04 per unit of risk. If you would invest  407.00  in Eltek on October 10, 2024 and sell it today you would earn a total of  717.00  from holding Eltek or generate 176.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	22.83%
Values	Daily Returns

Eltek  vs.  US04685A2N06

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.

US04685A2N06

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in US04685A2N06 are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 04685A2N0 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eltek and 04685A2N0

The main advantage of trading using opposite Eltek and 04685A2N0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eltek position performs unexpectedly, 04685A2N0 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 04685A2N0 will offset losses from the drop in 04685A2N0's long position.

The idea behind Eltek and US04685A2N06 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.