Correlation Between LGL and Eltek

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

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

Diversification Opportunities for LGL and Eltek

0.0

Correlation Coefficient

LGL  Eltek

Pay attention - limited upside

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

Pair Corralation between LGL and Eltek

Considering the 90-day investment horizon LGL is expected to generate 2.66 times less return on investment than Eltek. But when comparing it to its historical volatility, LGL Group is 1.81 times less risky than Eltek. It trades about 0.05 of its potential returns per unit of risk. Eltek is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  399.00  in Eltek on September 17, 2024 and sell it today you would earn a total of  703.00  from holding Eltek or generate 176.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

LGL Group  vs.  Eltek

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.

Eltek

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eltek are ranked lower than 2 (%) 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 recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with LGL and Eltek

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

The idea behind LGL Group and Eltek 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 CEOs Directory module to screen CEOs from public companies around the world.