Correlation Between LightPath Technologies and Eltek

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

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

Diversification Opportunities for LightPath Technologies and Eltek

-0.04

Correlation Coefficient

LightPath Technologies  Eltek

Good diversification

The 3 months correlation between LightPath and Eltek is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding LightPath Technologies and Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eltek and LightPath Technologies 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 LightPath Technologies 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 LightPath Technologies i.e., LightPath Technologies and Eltek go up and down completely randomly.

Pair Corralation between LightPath Technologies and Eltek

Given the investment horizon of 90 days LightPath Technologies is expected to generate 2.13 times more return on investment than Eltek. However, LightPath Technologies is 2.13 times more volatile than Eltek. It trades about 0.43 of its potential returns per unit of risk. Eltek is currently generating about 0.03 per unit of risk. If you would invest  160.00  in LightPath Technologies on October 7, 2024 and sell it today you would earn a total of  254.00  from holding LightPath Technologies or generate 158.75% return on investment over 90 days.

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

LightPath Technologies  vs.  Eltek

LightPath Technologies

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in LightPath Technologies are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, LightPath Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 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 LightPath Technologies and Eltek

The main advantage of trading using opposite LightPath Technologies and Eltek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LightPath Technologies 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 LightPath Technologies 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.