Correlation Between ACT Energy and Western Investment

Can any of the company-specific risk be diversified away by investing in both ACT Energy and Western Investment 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 Energy and Western Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ACT Energy Technologies and Western Investment, you can compare the effects of market volatilities on ACT Energy and Western Investment 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 Energy with a short position of Western Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACT Energy and Western Investment.

Diversification Opportunities for ACT Energy and Western Investment

0.32

Correlation Coefficient

ACT Energy  Western Investment

Weak diversification

The 3 months correlation between ACT and Western is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding ACT Energy Technologies and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment and ACT Energy 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 Energy Technologies are associated (or correlated) with Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of ACT Energy i.e., ACT Energy and Western Investment go up and down completely randomly.

Pair Corralation between ACT Energy and Western Investment

Assuming the 90 days trading horizon ACT Energy Technologies is expected to generate 0.68 times more return on investment than Western Investment. However, ACT Energy Technologies is 1.46 times less risky than Western Investment. It trades about 0.05 of its potential returns per unit of risk. Western Investment is currently generating about 0.01 per unit of risk. If you would invest  491.00  in ACT Energy Technologies on July 31, 2025 and sell it today you would earn a total of  23.00  from holding ACT Energy Technologies or generate 4.68% return on investment over 90 days.

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

ACT Energy Technologies  vs.  Western Investment

ACT Energy Technologies

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in ACT Energy Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, ACT Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Western Investment

Risk-Adjusted Performance

Weakest

Over the last 90 days Western Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Western Investment is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ACT Energy and Western Investment

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

The idea behind ACT Energy Technologies and Western Investment 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.