Correlation Between Valens and Eltek

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

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

Diversification Opportunities for Valens and Eltek

0.0

Correlation Coefficient

Valens  Eltek

Pay attention - limited upside

The 3 months correlation between Valens and Eltek is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Valens and Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eltek and Valens 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 Valens 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 Valens i.e., Valens and Eltek go up and down completely randomly.

Pair Corralation between Valens and Eltek

Considering the 90-day investment horizon Valens is expected to generate 1.66 times more return on investment than Eltek. However, Valens is 1.66 times more volatile than Eltek. It trades about 0.08 of its potential returns per unit of risk. Eltek is currently generating about 0.03 per unit of risk. 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

Valens  vs.  Eltek

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.

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.

Pair Trading with Valens and Eltek

The main advantage of trading using opposite Valens and Eltek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valens 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 Valens 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.