Correlation Between Tigo Energy and Eltek

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

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

Diversification Opportunities for Tigo Energy and Eltek

-0.39

Correlation Coefficient

Tigo Energy  Eltek

Very good diversification

The 3 months correlation between Tigo and Eltek is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Tigo Energy and Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eltek and Tigo Energy 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 Tigo Energy 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 Tigo Energy i.e., Tigo Energy and Eltek go up and down completely randomly.

Pair Corralation between Tigo Energy and Eltek

Given the investment horizon of 90 days Tigo Energy is expected to generate 1.78 times more return on investment than Eltek. However, Tigo Energy is 1.78 times more volatile than Eltek. It trades about -0.03 of its potential returns per unit of risk. Eltek is currently generating about -0.09 per unit of risk. If you would invest  102.00  in Tigo Energy on September 21, 2024 and sell it today you would lose (8.00) from holding Tigo Energy or give up 7.84% of portfolio value over 90 days.

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

Tigo Energy  vs.  Eltek

Tigo Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tigo Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Eltek

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eltek are ranked lower than 1 (%) 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 latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Tigo Energy and Eltek

The main advantage of trading using opposite Tigo Energy and Eltek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tigo Energy 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.

The idea behind Tigo Energy and Eltek 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.