Correlation Between Freedom Holding and XMReality

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

Diversification Opportunities for Freedom Holding and XMReality

0.0

Correlation Coefficient

Freedom Holding  XMReality

Pay attention - limited upside

The 3 months correlation between Freedom and XMReality is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and XMReality AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XMReality AB 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 XMReality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XMReality AB has no effect on the direction of Freedom Holding i.e., Freedom Holding and XMReality go up and down completely randomly.

Pair Corralation between Freedom Holding and XMReality

Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 0.45 times more return on investment than XMReality. However, Freedom Holding Corp is 2.23 times less risky than XMReality. It trades about 0.08 of its potential returns per unit of risk. XMReality AB is currently generating about -0.06 per unit of risk. If you would invest  5,830  in Freedom Holding Corp on September 26, 2024 and sell it today you would earn a total of  7,062  from holding Freedom Holding Corp or generate 121.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Freedom Holding Corp  vs.  XMReality AB

Freedom Holding Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical indicators, Freedom Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

XMReality AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XMReality AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, XMReality is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Freedom Holding and XMReality

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

The idea behind Freedom Holding Corp and XMReality AB 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.