Correlation Between Luxfer Holdings and Eltek

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

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

Diversification Opportunities for Luxfer Holdings and Eltek

0.44

Correlation Coefficient

Luxfer Holdings  Eltek

Very weak diversification

The 3 months correlation between Luxfer and Eltek is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eltek and Luxfer Holdings 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 Luxfer Holdings PLC 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 Luxfer Holdings i.e., Luxfer Holdings and Eltek go up and down completely randomly.

Pair Corralation between Luxfer Holdings and Eltek

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 0.65 times more return on investment than Eltek. However, Luxfer Holdings PLC is 1.53 times less risky than Eltek. It trades about 0.08 of its potential returns per unit of risk. Eltek is currently generating about 0.0 per unit of risk. If you would invest  806.00  in Luxfer Holdings PLC on September 21, 2024 and sell it today you would earn a total of  507.00  from holding Luxfer Holdings PLC or generate 62.9% return on investment over 90 days.

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

Luxfer Holdings PLC  vs.  Eltek

Luxfer Holdings PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Luxfer Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eltek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eltek has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Luxfer Holdings and Eltek

The main advantage of trading using opposite Luxfer Holdings and Eltek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings 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 Luxfer Holdings PLC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.