Correlation Between Emerson Radio and Eltek
Can any of the company-specific risk be diversified away by investing in both Emerson Radio and Eltek 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 Emerson Radio and Eltek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Radio and Eltek, you can compare the effects of market volatilities on Emerson Radio and Eltek 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 Emerson Radio with a short position of Eltek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Radio and Eltek.
Diversification Opportunities for Emerson Radio and Eltek
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Emerson and Eltek is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eltek and Emerson Radio 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 Emerson Radio are associated (or correlated) with Eltek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eltek has no effect on the direction of Emerson Radio i.e., Emerson Radio and Eltek go up and down completely randomly.
Pair Corralation between Emerson Radio and Eltek
Considering the 90-day investment horizon Emerson Radio is expected to generate 4.23 times more return on investment than Eltek. However, Emerson Radio is 4.23 times more volatile than Eltek. It trades about 0.11 of its potential returns per unit of risk. Eltek is currently generating about -0.02 per unit of risk. If you would invest 44.00 in Emerson Radio on November 6, 2024 and sell it today you would earn a total of 5.00 from holding Emerson Radio or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerson Radio vs. Eltek
Performance |
| Timeline |
| Emerson Radio |
| Eltek |
Emerson Radio and Eltek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Radio and Eltek
The main advantage of trading using opposite Emerson Radio and Eltek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Radio position performs unexpectedly, Eltek 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 Eltek will offset losses from the drop in Eltek's long position.| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Koss Corporation | Emerson Radio vs. Wearable Devices |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |