Correlation Between Freedom Holding and LuxUrban Hotels

Can any of the company-specific risk be diversified away by investing in both Freedom Holding and LuxUrban Hotels 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 LuxUrban Hotels 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 LuxUrban Hotels 1300, you can compare the effects of market volatilities on Freedom Holding and LuxUrban Hotels 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 LuxUrban Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Holding and LuxUrban Hotels.

Diversification Opportunities for Freedom Holding and LuxUrban Hotels

-0.21

Correlation Coefficient

Freedom Holding  LuxUrban Hotels

Very good diversification

The 3 months correlation between Freedom and LuxUrban is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and LuxUrban Hotels 1300 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LuxUrban Hotels 1300 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 LuxUrban Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LuxUrban Hotels 1300 has no effect on the direction of Freedom Holding i.e., Freedom Holding and LuxUrban Hotels go up and down completely randomly.

Pair Corralation between Freedom Holding and LuxUrban Hotels

Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 0.29 times more return on investment than LuxUrban Hotels. However, Freedom Holding Corp is 3.42 times less risky than LuxUrban Hotels. It trades about 0.24 of its potential returns per unit of risk. LuxUrban Hotels 1300 is currently generating about -0.12 per unit of risk. If you would invest  10,610  in Freedom Holding Corp on October 24, 2024 and sell it today you would earn a total of  3,222  from holding Freedom Holding Corp or generate 30.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Freedom Holding Corp  vs.  LuxUrban Hotels 1300

Freedom Holding Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 18 (%) 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.

LuxUrban Hotels 1300

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LuxUrban Hotels 1300 has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Preferred Stock's technical indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Freedom Holding and LuxUrban Hotels

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

The idea behind Freedom Holding Corp and LuxUrban Hotels 1300 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.