Correlation Between Leons Furniture and ACT Energy

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

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

Diversification Opportunities for Leons Furniture and ACT Energy

-0.04

Correlation Coefficient

Leons Furniture  ACT Energy

Good diversification

The 3 months correlation between Leons and ACT is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and ACT Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACT Energy Technologies and Leons Furniture 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 Leons Furniture Limited are associated (or correlated) with ACT Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACT Energy Technologies has no effect on the direction of Leons Furniture i.e., Leons Furniture and ACT Energy go up and down completely randomly.

Pair Corralation between Leons Furniture and ACT Energy

Assuming the 90 days trading horizon Leons Furniture is expected to generate 2.14 times less return on investment than ACT Energy. But when comparing it to its historical volatility, Leons Furniture Limited is 1.25 times less risky than ACT Energy. It trades about 0.06 of its potential returns per unit of risk. ACT Energy Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  453.00  in ACT Energy Technologies on July 20, 2025 and sell it today you would earn a total of  59.00  from holding ACT Energy Technologies or generate 13.02% return on investment over 90 days.

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

Leons Furniture Limited  vs.  ACT Energy Technologies

Leons Furniture

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Leons Furniture Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Leons Furniture may actually be approaching a critical reversion point that can send shares even higher in November 2025.

ACT Energy Technologies

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in ACT Energy Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, ACT Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Leons Furniture and ACT Energy

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

The idea behind Leons Furniture Limited and ACT Energy Technologies 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.