Correlation Between Contact Financial and Act Financial
Can any of the company-specific risk be diversified away by investing in both Contact Financial and Act 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 Contact Financial and Act Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Contact Financial Holding and Act Financial, you can compare the effects of market volatilities on Contact Financial and Act 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 Contact Financial with a short position of Act Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contact Financial and Act Financial.
Diversification Opportunities for Contact Financial and Act Financial
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Contact and Act is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Contact Financial Holding and Act Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Act Financial and Contact 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 Contact Financial Holding are associated (or correlated) with Act Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Act Financial has no effect on the direction of Contact Financial i.e., Contact Financial and Act Financial go up and down completely randomly.
Pair Corralation between Contact Financial and Act Financial
Assuming the 90 days trading horizon Contact Financial Holding is expected to generate 1.05 times more return on investment than Act Financial. However, Contact Financial is 1.05 times more volatile than Act Financial. It trades about 0.04 of its potential returns per unit of risk. Act Financial is currently generating about -0.01 per unit of risk. If you would invest 404.00 in Contact Financial Holding on October 26, 2024 and sell it today you would earn a total of 42.00 from holding Contact Financial Holding or generate 10.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.04% |
| Values | Daily Returns |
Contact Financial Holding vs. Act Financial
Performance |
| Timeline |
| Contact Financial Holding |
| Act Financial |
Contact Financial and Act Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Contact Financial and Act Financial
The main advantage of trading using opposite Contact Financial and Act Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contact Financial position performs unexpectedly, Act 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 Act Financial will offset losses from the drop in Act Financial's long position.| Contact Financial vs. Paint Chemicals Industries | Contact Financial vs. Reacap Financial Investments | Contact Financial vs. Egyptians For Investment | Contact Financial vs. Misr Oils Soap |
| Act Financial vs. Paint Chemicals Industries | Act Financial vs. Reacap Financial Investments | Act Financial vs. Egyptians For Investment | Act 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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