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

0.36

Correlation Coefficient

Act Financial  Export Development

Weak diversification

The 3 months correlation between Act and Export is 0.36. 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 5.01 times less return on investment than Export Development. In addition to that, Act Financial is 1.23 times more volatile than Export Development Bank. It trades about 0.03 of its total potential returns per unit of risk. Export Development Bank is currently generating about 0.16 per unit of volatility. If you would invest  1,502  in Export Development Bank on September 17, 2024 and sell it today you would earn a total of  330.00  from holding Export Development Bank or generate 21.97% return on investment over 90 days.

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

Act Financial  vs.  Export Development Bank

Act Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Act Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Act Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Export Development Bank

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Export Development Bank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Export Development reported solid returns over the last few months and may actually be approaching a breakup point.

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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.