Correlation Between Elron Electronic and TAT Technologies

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Can any of the company-specific risk be diversified away by investing in both Elron Electronic and TAT Technologies 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 Elron Electronic and TAT Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elron Electronic Industries and TAT Technologies, you can compare the effects of market volatilities on Elron Electronic and TAT Technologies 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 Elron Electronic with a short position of TAT Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elron Electronic and TAT Technologies.

Diversification Opportunities for Elron Electronic and TAT Technologies

ElronTATDiversified AwayElronTATDiversified Away100%
0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Elron and TAT is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Elron Electronic Industries and TAT Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAT Technologies and Elron Electronic 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 Elron Electronic Industries are associated (or correlated) with TAT Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAT Technologies has no effect on the direction of Elron Electronic i.e., Elron Electronic and TAT Technologies go up and down completely randomly.

Pair Corralation between Elron Electronic and TAT Technologies

Assuming the 90 days trading horizon Elron Electronic is expected to generate 271.29 times less return on investment than TAT Technologies. In addition to that, Elron Electronic is 1.11 times more volatile than TAT Technologies. It trades about 0.0 of its total potential returns per unit of risk. TAT Technologies is currently generating about 0.17 per unit of volatility. If you would invest  464,000  in TAT Technologies on November 14, 2024 and sell it today you would earn a total of  582,000  from holding TAT Technologies or generate 125.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Elron Electronic Industries  vs.  TAT Technologies

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 0204060
JavaScript chart by amCharts 3.21.15ELRN TATT
       Timeline  
Elron Electronic Ind 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Over the last 90 days Elron Electronic Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Elron Electronic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanFebDecJanFeb350400450500
TAT Technologies 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in TAT Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TAT Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanFebDecJanFeb7,0008,0009,00010,00011,000

Elron Electronic and TAT Technologies Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-13.48-10.1-6.71-3.330.03.456.9610.4713.97 0.0100.0150.0200.0250.0300.035
JavaScript chart by amCharts 3.21.15ELRN TATT
       Returns  

Pair Trading with Elron Electronic and TAT Technologies

The main advantage of trading using opposite Elron Electronic and TAT Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elron Electronic position performs unexpectedly, TAT Technologies 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 TAT Technologies will offset losses from the drop in TAT Technologies' long position.
The idea behind Elron Electronic Industries and TAT Technologies 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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