Correlation Between Freedom Holding and Gladstone Investment

Can any of the company-specific risk be diversified away by investing in both Freedom Holding and Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment, you can compare the effects of market volatilities on Freedom Holding and Gladstone Investment 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 Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Holding and Gladstone Investment.

Diversification Opportunities for Freedom Holding and Gladstone Investment

0.73

Correlation Coefficient

Freedom Holding  Gladstone Investment

Poor diversification

The 3 months correlation between Freedom and Gladstone is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Freedom Holding i.e., Freedom Holding and Gladstone Investment go up and down completely randomly.

Pair Corralation between Freedom Holding and Gladstone Investment

Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 2.24 times more return on investment than Gladstone Investment. However, Freedom Holding is 2.24 times more volatile than Gladstone Investment. It trades about 0.04 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.06 per unit of risk. If you would invest  12,892  in Freedom Holding Corp on December 22, 2024 and sell it today you would earn a total of  513.00  from holding Freedom Holding Corp or generate 3.98% return on investment over 90 days.

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

Freedom Holding Corp  vs.  Gladstone Investment

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 sound technical indicators, Freedom Holding is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Gladstone Investment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Gladstone Investment is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Freedom Holding and Gladstone Investment

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

The idea behind Freedom Holding Corp and Gladstone Investment 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.