Correlation Between Eltek and Amphenol
Can any of the company-specific risk be diversified away by investing in both Eltek and Amphenol 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 Amphenol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eltek and Amphenol, you can compare the effects of market volatilities on Eltek and Amphenol 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 Amphenol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eltek and Amphenol.
Diversification Opportunities for Eltek and Amphenol
Weak diversification
The 3 months correlation between Eltek and Amphenol is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and Amphenol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphenol 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 Amphenol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphenol has no effect on the direction of Eltek i.e., Eltek and Amphenol go up and down completely randomly.
Pair Corralation between Eltek and Amphenol
Given the investment horizon of 90 days Eltek is expected to generate 3.3 times less return on investment than Amphenol. In addition to that, Eltek is 1.2 times more volatile than Amphenol. It trades about 0.04 of its total potential returns per unit of risk. Amphenol is currently generating about 0.17 per unit of volatility. If you would invest 6,175 in Amphenol on September 2, 2024 and sell it today you would earn a total of 1,090 from holding Amphenol or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eltek vs. Amphenol
Performance |
| Timeline |
| Eltek |
| Amphenol |
Eltek and Amphenol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eltek and Amphenol
The main advantage of trading using opposite Eltek and Amphenol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eltek position performs unexpectedly, Amphenol 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 Amphenol will offset losses from the drop in Amphenol'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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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