Correlation Between Act Financial and Contact Financial
Can any of the company-specific risk be diversified away by investing in both Act Financial and Contact Financial 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 Act Financial and Contact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Act Financial and Contact Financial Holding, you can compare the effects of market volatilities on Act Financial and Contact Financial 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 Act Financial with a short position of Contact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Act Financial and Contact Financial.
Diversification Opportunities for Act Financial and Contact Financial
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Act and Contact is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Act Financial and Contact Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contact Financial Holding and Act Financial 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 Act Financial are associated (or correlated) with Contact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contact Financial Holding has no effect on the direction of Act Financial i.e., Act Financial and Contact Financial go up and down completely randomly.
Pair Corralation between Act Financial and Contact Financial
Assuming the 90 days trading horizon Act Financial is expected to under-perform the Contact Financial. In addition to that, Act Financial is 1.02 times more volatile than Contact Financial Holding. It trades about -0.03 of its total potential returns per unit of risk. Contact Financial Holding is currently generating about 0.03 per unit of volatility. If you would invest 395.00 in Contact Financial Holding on September 12, 2024 and sell it today you would earn a total of 62.00 from holding Contact Financial Holding or generate 15.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 19.74% |
| Values | Daily Returns |
Act Financial vs. Contact Financial Holding
Performance |
| Timeline |
| Act Financial |
| Contact Financial Holding |
Act Financial and Contact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Act Financial and Contact Financial
The main advantage of trading using opposite Act Financial and Contact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Act Financial position performs unexpectedly, Contact Financial 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 Contact Financial will offset losses from the drop in Contact Financial's long position.| Act Financial vs. Paint Chemicals Industries | Act Financial vs. Reacap Financial Investments | Act Financial vs. Egyptians For Investment | Act Financial vs. Misr Oils Soap |
| Contact Financial vs. Paint Chemicals Industries | Contact Financial vs. Reacap Financial Investments | Contact Financial vs. Egyptians For Investment | Contact Financial vs. Misr Oils Soap |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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