Correlation Between Freedom Holding and Royalty Management

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

Diversification Opportunities for Freedom Holding and Royalty Management

0.66

Correlation Coefficient

Freedom Holding  Royalty Management

Poor diversification

The 3 months correlation between Freedom and Royalty is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and Royalty Management Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalty Management 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 Royalty Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalty Management has no effect on the direction of Freedom Holding i.e., Freedom Holding and Royalty Management go up and down completely randomly.

Pair Corralation between Freedom Holding and Royalty Management

Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 0.72 times more return on investment than Royalty Management. However, Freedom Holding Corp is 1.38 times less risky than Royalty Management. It trades about 0.05 of its potential returns per unit of risk. Royalty Management Holding is currently generating about 0.02 per unit of risk. If you would invest  12,892  in Freedom Holding Corp on December 21, 2024 and sell it today you would earn a total of  655.00  from holding Freedom Holding Corp or generate 5.08% 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.  Royalty Management Holding

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 weak technical indicators, Freedom Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Royalty Management

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Royalty Management Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Royalty Management is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Freedom Holding and Royalty Management

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

The idea behind Freedom Holding Corp and Royalty Management Holding 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.