Correlation Between ASA Gold and Freedom Bank

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

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

Diversification Opportunities for ASA Gold and Freedom Bank

-0.26

Correlation Coefficient

ASA Gold  Freedom Bank

Very good diversification

The 3 months correlation between ASA and Freedom is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding ASA Gold and and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank and ASA Gold 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 ASA Gold and are associated (or correlated) with Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of ASA Gold i.e., ASA Gold and Freedom Bank go up and down completely randomly.

Pair Corralation between ASA Gold and Freedom Bank

Considering the 90-day investment horizon ASA Gold and is expected to generate 3.08 times more return on investment than Freedom Bank. However, ASA Gold is 3.08 times more volatile than Freedom Bank of. It trades about 0.11 of its potential returns per unit of risk. Freedom Bank of is currently generating about 0.1 per unit of risk. If you would invest  2,339  in ASA Gold and on December 2, 2024 and sell it today you would earn a total of  102.00  from holding ASA Gold and or generate 4.36% return on investment over 90 days.

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

ASA Gold and  vs.  Freedom Bank of

ASA Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASA Gold and are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, ASA Gold sustained solid returns over the last few months and may actually be approaching a breakup point.

Freedom Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Freedom Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freedom Bank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ASA Gold and Freedom Bank

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

The idea behind ASA Gold and and Freedom Bank of 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.