Correlation Between Aldel Financial and Freedom Holding

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

By analyzing existing cross correlation between Aldel Financial II and Freedom Holding Corp, you can compare the effects of market volatilities on Aldel Financial and Freedom Holding 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 Aldel Financial with a short position of Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Freedom Holding.

Diversification Opportunities for Aldel Financial and Freedom Holding

0.39

Correlation Coefficient

Aldel Financial  Freedom Holding

Weak diversification

The 3 months correlation between Aldel and Freedom is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Freedom Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holding Corp and Aldel 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 Aldel Financial II are associated (or correlated) with Freedom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holding Corp has no effect on the direction of Aldel Financial i.e., Aldel Financial and Freedom Holding go up and down completely randomly.

Pair Corralation between Aldel Financial and Freedom Holding

Assuming the 90 days horizon Aldel Financial is expected to generate 4.04 times less return on investment than Freedom Holding. But when comparing it to its historical volatility, Aldel Financial II is 10.67 times less risky than Freedom Holding. It trades about 0.12 of its potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  12,892  in Freedom Holding Corp on December 21, 2024 and sell it today you would earn a total of  655.00  from holding Freedom Holding Corp or generate 5.08% return on investment over 90 days.

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

Aldel Financial II  vs.  Freedom Holding Corp

Aldel Financial II

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Freedom Holding Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Freedom Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Aldel Financial and Freedom Holding

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

The idea behind Aldel Financial II and Freedom Holding Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.