Correlation Between Freedom Holding and PFIZER

Can any of the company-specific risk be diversified away by investing in both Freedom Holding and PFIZER 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 PFIZER 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 PFIZER INC 4125, you can compare the effects of market volatilities on Freedom Holding and PFIZER 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 PFIZER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Holding and PFIZER.

Diversification Opportunities for Freedom Holding and PFIZER

-0.08

Correlation Coefficient

Freedom Holding  PFIZER

Good diversification

The 3 months correlation between Freedom and PFIZER is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and PFIZER INC 4125 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC 4125 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 PFIZER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PFIZER INC 4125 has no effect on the direction of Freedom Holding i.e., Freedom Holding and PFIZER go up and down completely randomly.

Pair Corralation between Freedom Holding and PFIZER

Given the investment horizon of 90 days Freedom Holding is expected to generate 10.93 times less return on investment than PFIZER. But when comparing it to its historical volatility, Freedom Holding Corp is 19.83 times less risky than PFIZER. It trades about 0.08 of its potential returns per unit of risk. PFIZER INC 4125 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,447  in PFIZER INC 4125 on October 21, 2024 and sell it today you would lose (949.00) from holding PFIZER INC 4125 or give up 10.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.34%
Values	Daily Returns

Freedom Holding Corp  vs.  PFIZER INC 4125

Freedom Holding Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 17 (%) 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.

PFIZER INC 4125

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PFIZER INC 4125 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PFIZER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Freedom Holding and PFIZER

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

The idea behind Freedom Holding Corp and PFIZER INC 4125 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.