Correlation Between Eltek and Key Tronic

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

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

Diversification Opportunities for Eltek and Key Tronic

-0.23

Correlation Coefficient

Eltek  Key Tronic

Very good diversification

The 3 months correlation between Eltek and Key is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and Key Tronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Key Tronic 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 Key Tronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Key Tronic has no effect on the direction of Eltek i.e., Eltek and Key Tronic go up and down completely randomly.

Pair Corralation between Eltek and Key Tronic

Given the investment horizon of 90 days Eltek is expected to generate 0.87 times more return on investment than Key Tronic. However, Eltek is 1.15 times less risky than Key Tronic. It trades about 0.04 of its potential returns per unit of risk. Key Tronic is currently generating about -0.07 per unit of risk. If you would invest  990.00  in Eltek on May 20, 2025 and sell it today you would earn a total of  36.00  from holding Eltek or generate 3.64% return on investment over 90 days.

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

Eltek  vs.  Key Tronic

Eltek

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Eltek are ranked lower than 3 (%) 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 current stock price mess, may contribute to short-term losses for the institutional investors.

Key Tronic

Risk-Adjusted Performance

Weakest

Over the last 90 days Key Tronic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Eltek and Key Tronic

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

The idea behind Eltek and Key Tronic 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.