Correlation Between Eltek and Flex
Can any of the company-specific risk be diversified away by investing in both Eltek and Flex 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 Flex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eltek and Flex, you can compare the effects of market volatilities on Eltek and Flex 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 Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eltek and Flex.
Diversification Opportunities for Eltek and Flex
Weak diversification
The 3 months correlation between Eltek and Flex is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex 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 Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex has no effect on the direction of Eltek i.e., Eltek and Flex go up and down completely randomly.
Pair Corralation between Eltek and Flex
Given the investment horizon of 90 days Eltek is expected to generate 5.14 times less return on investment than Flex. But when comparing it to its historical volatility, Eltek is 1.31 times less risky than Flex. It trades about 0.04 of its potential returns per unit of risk. Flex is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,045 in Flex on September 2, 2024 and sell it today you would earn a total of 852.00 from holding Flex or generate 27.98% 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. Flex
Performance |
| Timeline |
| Eltek |
| Flex |
Eltek and Flex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eltek and Flex
The main advantage of trading using opposite Eltek and Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eltek position performs unexpectedly, Flex 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 Flex will offset losses from the drop in Flex'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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |