Correlation Between Ryanair Holdings and Eltek

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

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

Diversification Opportunities for Ryanair Holdings and Eltek

0.06

Correlation Coefficient

Ryanair Holdings  Eltek

Significant diversification

The 3 months correlation between Ryanair and Eltek is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eltek and Ryanair 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 Ryanair 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 Ryanair Holdings i.e., Ryanair Holdings and Eltek go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Eltek

Assuming the 90 days horizon Ryanair Holdings is expected to generate 4.14 times less return on investment than Eltek. But when comparing it to its historical volatility, Ryanair Holdings PLC is 1.12 times less risky than Eltek. It trades about 0.02 of its potential returns per unit of risk. Eltek is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  945.00  in Eltek on September 29, 2024 and sell it today you would earn a total of  160.00  from holding Eltek or generate 16.93% return on investment over 90 days.

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

Ryanair Holdings PLC  vs.  Eltek

Ryanair Holdings PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ryanair Holdings PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Ryanair Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Eltek

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eltek are ranked lower than 1 (%) 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 newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ryanair Holdings and Eltek

The main advantage of trading using opposite Ryanair Holdings and Eltek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair 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 Ryanair 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.