Correlation Between Eltek and Allient
Can any of the company-specific risk be diversified away by investing in both Eltek and Allient 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 Eltek and Allient into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eltek and Allient, you can compare the effects of market volatilities on Eltek and Allient 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 Eltek with a short position of Allient. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eltek and Allient.
Diversification Opportunities for Eltek and Allient
Poor diversification
The 3 months correlation between Eltek and Allient is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and Eltek 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 Eltek are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Eltek i.e., Eltek and Allient go up and down completely randomly.
Pair Corralation between Eltek and Allient
Given the investment horizon of 90 days Eltek is expected to generate 8.02 times less return on investment than Allient. But when comparing it to its historical volatility, Eltek is 1.5 times less risky than Allient. It trades about 0.1 of its potential returns per unit of risk. Allient is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest 1,733 in Allient on August 23, 2024 and sell it today you would earn a total of 729.00 from holding Allient or generate 42.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eltek vs. Allient
Performance |
| Timeline |
| Eltek |
| Allient |
Eltek and Allient Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eltek and Allient
The main advantage of trading using opposite Eltek and Allient positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eltek position performs unexpectedly, Allient 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 Allient will offset losses from the drop in Allient's long position.| Eltek vs. Methode Electronics | Eltek vs. OSI Systems | Eltek vs. Bel Fuse A | Eltek vs. Richardson Electronics |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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