Correlation Between NexGel Warrant and Eltek

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

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

Diversification Opportunities for NexGel Warrant and Eltek

0.25

Correlation Coefficient

NexGel Warrant  Eltek

Modest diversification

The 3 months correlation between NexGel and Eltek is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding NexGel Warrant and Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eltek and NexGel Warrant 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 NexGel Warrant 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 NexGel Warrant i.e., NexGel Warrant and Eltek go up and down completely randomly.

Pair Corralation between NexGel Warrant and Eltek

Assuming the 90 days horizon NexGel Warrant is expected to generate 4.27 times more return on investment than Eltek. However, NexGel Warrant is 4.27 times more volatile than Eltek. It trades about 0.24 of its potential returns per unit of risk. Eltek is currently generating about -0.1 per unit of risk. If you would invest  47.00  in NexGel Warrant on October 6, 2024 and sell it today you would earn a total of  28.00  from holding NexGel Warrant or generate 59.57% return on investment over 90 days.

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

NexGel Warrant  vs.  Eltek

NexGel Warrant

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NexGel Warrant are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, NexGel Warrant showed 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 NexGel Warrant and Eltek

The main advantage of trading using opposite NexGel Warrant and Eltek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGel Warrant 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 NexGel Warrant 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.