Correlation Between Golden Textiles and Act Financial
Can any of the company-specific risk be diversified away by investing in both Golden Textiles 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 Golden Textiles and Act Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Textiles Clothes and Act Financial, you can compare the effects of market volatilities on Golden Textiles 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 Golden Textiles with a short position of Act Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Textiles and Act Financial.
Diversification Opportunities for Golden Textiles and Act Financial
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Golden and Act is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Golden Textiles Clothes and Act Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Act Financial and Golden Textiles 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 Golden Textiles Clothes 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 Golden Textiles i.e., Golden Textiles and Act Financial go up and down completely randomly.
Pair Corralation between Golden Textiles and Act Financial
Assuming the 90 days trading horizon Golden Textiles Clothes is expected to generate 1.26 times more return on investment than Act Financial. However, Golden Textiles is 1.26 times more volatile than Act Financial. It trades about 0.1 of its potential returns per unit of risk. Act Financial is currently generating about -0.03 per unit of risk. If you would invest 718.00 in Golden Textiles Clothes on September 12, 2024 and sell it today you would earn a total of 1,786 from holding Golden Textiles Clothes or generate 248.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 19.74% |
| Values | Daily Returns |
Golden Textiles Clothes vs. Act Financial
Performance |
| Timeline |
| Golden Textiles Clothes |
| Act Financial |
Golden Textiles and Act Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Textiles and Act Financial
The main advantage of trading using opposite Golden Textiles and Act Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Textiles 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.| Golden Textiles vs. Paint Chemicals Industries | Golden Textiles vs. Reacap Financial Investments | Golden Textiles vs. Egyptians For Investment | Golden Textiles 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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