Correlation Between Freedom Holding and Dianthus Therapeutics

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

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

Diversification Opportunities for Freedom Holding and Dianthus Therapeutics

-0.68

Correlation Coefficient

Freedom Holding  Dianthus Therapeutics

Excellent diversification

The 3 months correlation between Freedom and Dianthus is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and Dianthus Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dianthus Therapeutics and Freedom Holding 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 Freedom Holding Corp are associated (or correlated) with Dianthus Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dianthus Therapeutics has no effect on the direction of Freedom Holding i.e., Freedom Holding and Dianthus Therapeutics go up and down completely randomly.

Pair Corralation between Freedom Holding and Dianthus Therapeutics

Given the investment horizon of 90 days Freedom Holding is expected to generate 2.09 times less return on investment than Dianthus Therapeutics. But when comparing it to its historical volatility, Freedom Holding Corp is 2.33 times less risky than Dianthus Therapeutics. It trades about 0.25 of its potential returns per unit of risk. Dianthus Therapeutics is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,027  in Dianthus Therapeutics on September 22, 2024 and sell it today you would earn a total of  353.00  from holding Dianthus Therapeutics or generate 17.41% return on investment over 90 days.

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

Freedom Holding Corp  vs.  Dianthus Therapeutics

Freedom Holding Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical indicators, Freedom Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dianthus Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dianthus Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Dianthus Therapeutics is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Freedom Holding and Dianthus Therapeutics

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

The idea behind Freedom Holding Corp and Dianthus Therapeutics 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.