Correlation Between Act Financial and Export Development

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

By analyzing existing cross correlation between Act Financial and Export Development Bank, you can compare the effects of market volatilities on Act Financial and Export Development 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 Export Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Act Financial and Export Development.

Diversification Opportunities for Act Financial and Export Development

0.63

Correlation Coefficient

Act Financial  Export Development

Poor diversification

The 3 months correlation between Act and Export is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Act Financial and Export Development Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Export Development Bank 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 Export Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Export Development Bank has no effect on the direction of Act Financial i.e., Act Financial and Export Development go up and down completely randomly.

Pair Corralation between Act Financial and Export Development

Assuming the 90 days trading horizon Act Financial is expected to generate 2.02 times more return on investment than Export Development. However, Act Financial is 2.02 times more volatile than Export Development Bank. It trades about 0.17 of its potential returns per unit of risk. Export Development Bank is currently generating about -0.17 per unit of risk. If you would invest  322.00  in Act Financial on October 22, 2024 and sell it today you would earn a total of  25.00  from holding Act Financial or generate 7.76% return on investment over 90 days.

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

Act Financial  vs.  Export Development Bank

Act Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Act Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Act Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Export Development Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Export Development Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Export Development may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Act Financial and Export Development

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

The idea behind Act Financial and Export Development Bank 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.