Correlation Between Eltek and Valens

Can any of the company-specific risk be diversified away by investing in both Eltek and Valens 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 Valens into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eltek and Valens, you can compare the effects of market volatilities on Eltek and Valens 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 Valens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eltek and Valens.

Diversification Opportunities for Eltek and Valens

0.0

Correlation Coefficient

Eltek  Valens

Pay attention - limited upside

The 3 months correlation between Eltek and Valens is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens 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 Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of Eltek i.e., Eltek and Valens go up and down completely randomly.

Pair Corralation between Eltek and Valens

Given the investment horizon of 90 days Eltek is expected to generate 4.99 times less return on investment than Valens. But when comparing it to its historical volatility, Eltek is 1.66 times less risky than Valens. It trades about 0.03 of its potential returns per unit of risk. Valens is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  180.00  in Valens on September 26, 2024 and sell it today you would earn a total of  12.00  from holding Valens or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Eltek  vs.  Valens

Eltek

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eltek are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Eltek is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Valens

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Eltek and Valens

The main advantage of trading using opposite Eltek and Valens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eltek position performs unexpectedly, Valens 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 Valens will offset losses from the drop in Valens' long position.

The idea behind Eltek and Valens pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.