Correlation Between Futuretech and Freedom Holding

Can any of the company-specific risk be diversified away by investing in both Futuretech and Freedom Holding 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 Futuretech and Freedom Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Futuretech II Acquisition and Freedom Holding Corp, you can compare the effects of market volatilities on Futuretech and Freedom Holding 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 Futuretech with a short position of Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Futuretech and Freedom Holding.

Diversification Opportunities for Futuretech and Freedom Holding

0.38

Correlation Coefficient

Futuretech  Freedom Holding

Weak diversification

The 3 months correlation between Futuretech and Freedom is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Futuretech II Acquisition and Freedom Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holding Corp and Futuretech 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 Futuretech II Acquisition are associated (or correlated) with Freedom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holding Corp has no effect on the direction of Futuretech i.e., Futuretech and Freedom Holding go up and down completely randomly.

Pair Corralation between Futuretech and Freedom Holding

Given the investment horizon of 90 days Futuretech is expected to generate 5.42 times less return on investment than Freedom Holding. But when comparing it to its historical volatility, Futuretech II Acquisition is 3.33 times less risky than Freedom Holding. It trades about 0.05 of its potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,234  in Freedom Holding Corp on October 10, 2024 and sell it today you would earn a total of  6,866  from holding Freedom Holding Corp or generate 110.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Futuretech II Acquisition  vs.  Freedom Holding Corp

Futuretech II Acquisition

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Futuretech II Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Futuretech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 weak technical indicators, Freedom Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Futuretech and Freedom Holding

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

The idea behind Futuretech II Acquisition and Freedom Holding Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.