Correlation Between Eltek and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both Eltek and Emerson Radio 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 Emerson Radio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eltek and Emerson Radio, you can compare the effects of market volatilities on Eltek and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eltek and Emerson Radio.
Diversification Opportunities for Eltek and Emerson Radio
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eltek and Emerson is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Eltek i.e., Eltek and Emerson Radio go up and down completely randomly.
Pair Corralation between Eltek and Emerson Radio
Given the investment horizon of 90 days Eltek is expected to generate 1.45 times more return on investment than Emerson Radio. However, Eltek is 1.45 times more volatile than Emerson Radio. It trades about 0.06 of its potential returns per unit of risk. Emerson Radio is currently generating about 0.0 per unit of risk. If you would invest 415.00 in Eltek on November 6, 2024 and sell it today you would earn a total of 668.00 from holding Eltek or generate 160.96% 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. Emerson Radio
Performance |
| Timeline |
| Eltek |
| Emerson Radio |
Eltek and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eltek and Emerson Radio
The main advantage of trading using opposite Eltek and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eltek position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| Eltek vs. Methode Electronics | Eltek vs. OSI Systems | Eltek vs. Bel Fuse A | Eltek vs. Richardson Electronics |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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