Correlation Between Eltek and Amphenol

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Can any of the company-specific risk be diversified away by investing in both Eltek and Amphenol 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 Amphenol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eltek and Amphenol, you can compare the effects of market volatilities on Eltek and Amphenol 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 Amphenol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eltek and Amphenol.

Diversification Opportunities for Eltek and Amphenol

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Eltek and Amphenol is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and Amphenol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphenol 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 Amphenol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphenol has no effect on the direction of Eltek i.e., Eltek and Amphenol go up and down completely randomly.

Pair Corralation between Eltek and Amphenol

Given the investment horizon of 90 days Eltek is expected to generate 3.12 times more return on investment than Amphenol. However, Eltek is 3.12 times more volatile than Amphenol. It trades about 0.07 of its potential returns per unit of risk. Amphenol is currently generating about 0.07 per unit of risk. If you would invest  395.00  in Eltek on December 29, 2023 and sell it today you would earn a total of  719.00  from holding Eltek or generate 182.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.8%
ValuesDaily Returns

Eltek  vs.  Amphenol

 Performance 
       Timeline  
Eltek 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Eltek has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
Amphenol 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Amphenol are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Amphenol demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Eltek and Amphenol Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eltek and Amphenol

The main advantage of trading using opposite Eltek and Amphenol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eltek position performs unexpectedly, Amphenol 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 Amphenol will offset losses from the drop in Amphenol's long position.
The idea behind Eltek and Amphenol 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.
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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