Correlation Between Housing Development and Act Financial
Can any of the company-specific risk be diversified away by investing in both Housing Development 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 Housing Development and Act Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Housing Development Bank and Act Financial, you can compare the effects of market volatilities on Housing Development 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 Housing Development with a short position of Act Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Housing Development and Act Financial.
Diversification Opportunities for Housing Development and Act Financial
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Housing and Act is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Housing Development Bank and Act Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Act Financial and Housing Development 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 Housing Development Bank 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 Housing Development i.e., Housing Development and Act Financial go up and down completely randomly.
Pair Corralation between Housing Development and Act Financial
Assuming the 90 days trading horizon Housing Development Bank is expected to generate 0.76 times more return on investment than Act Financial. However, Housing Development Bank is 1.32 times less risky than Act Financial. It trades about 0.12 of its potential returns per unit of risk. Act Financial is currently generating about -0.03 per unit of risk. If you would invest 4,661 in Housing Development Bank on August 28, 2024 and sell it today you would earn a total of 671.00 from holding Housing Development Bank or generate 14.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Housing Development Bank vs. Act Financial
Performance |
| Timeline |
| Housing Development Bank |
| Act Financial |
Housing Development and Act Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Housing Development and Act Financial
The main advantage of trading using opposite Housing Development and Act Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Housing Development 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.| Housing Development vs. Paint Chemicals Industries | Housing Development vs. Egyptians For Investment | Housing Development vs. Misr Oils Soap | Housing Development vs. Global Telecom Holding |
| Act Financial vs. Paint Chemicals Industries | Act Financial vs. Egyptians For Investment | Act Financial vs. Misr Oils Soap | Act Financial vs. Global Telecom Holding |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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