Correlation Between Everus Construction and Freedom Holding

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

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

Diversification Opportunities for Everus Construction and Freedom Holding

-0.31

Correlation Coefficient

Everus Construction  Freedom Holding

Very good diversification

The 3 months correlation between Everus and Freedom is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Everus Construction Group 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 Everus Construction 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 Everus Construction Group 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 Everus Construction i.e., Everus Construction and Freedom Holding go up and down completely randomly.

Pair Corralation between Everus Construction and Freedom Holding

Considering the 90-day investment horizon Everus Construction Group is expected to generate 1.47 times more return on investment than Freedom Holding. However, Everus Construction is 1.47 times more volatile than Freedom Holding Corp. It trades about 0.27 of its potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.32 per unit of risk. If you would invest  5,922  in Everus Construction Group on September 14, 2024 and sell it today you would earn a total of  958.00  from holding Everus Construction Group or generate 16.18% return on investment over 90 days.

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

Everus Construction Group  vs.  Freedom Holding Corp

Everus Construction

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Freedom Holding Corp

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Freedom Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everus Construction and Freedom Holding

The main advantage of trading using opposite Everus Construction and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everus Construction 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 Everus Construction Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.