Correlation Between Freedom Holding and Western Acquisition

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

Diversification Opportunities for Freedom Holding and Western Acquisition

-0.35

Correlation Coefficient

Freedom Holding  Western Acquisition

Very good diversification

The 3 months correlation between Freedom and Western is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of Freedom Holding i.e., Freedom Holding and Western Acquisition go up and down completely randomly.

Pair Corralation between Freedom Holding and Western Acquisition

Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 0.9 times more return on investment than Western Acquisition. However, Freedom Holding Corp is 1.11 times less risky than Western Acquisition. It trades about 0.27 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.01 per unit of risk. If you would invest  9,847  in Freedom Holding Corp on October 9, 2024 and sell it today you would earn a total of  3,286  from holding Freedom Holding Corp or generate 33.37% return on investment over 90 days.

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

Freedom Holding Corp  vs.  Western Acquisition Ventures

Freedom Holding Corp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 20 (%) 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.

Western Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Acquisition Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Western Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Freedom Holding and Western Acquisition

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

The idea behind Freedom Holding Corp and Western Acquisition Ventures 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.