Correlation Between Goldman Sachs and Freedom Holding

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

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

Diversification Opportunities for Goldman Sachs and Freedom Holding

0.21

Correlation Coefficient

Goldman Sachs  Freedom Holding

Modest diversification

The 3 months correlation between Goldman and Freedom is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Capital 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 Goldman Sachs 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 Goldman Sachs Capital 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 Goldman Sachs i.e., Goldman Sachs and Freedom Holding go up and down completely randomly.

Pair Corralation between Goldman Sachs and Freedom Holding

Considering the 90-day investment horizon Goldman Sachs is expected to generate 2.05 times less return on investment than Freedom Holding. In addition to that, Goldman Sachs is 1.65 times more volatile than Freedom Holding Corp. It trades about 0.02 of its total potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.07 per unit of volatility. If you would invest  6,520  in Freedom Holding Corp on October 4, 2024 and sell it today you would earn a total of  6,549  from holding Freedom Holding Corp or generate 100.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.1%
Values	Daily Returns

Goldman Sachs Capital  vs.  Freedom Holding Corp

Goldman Sachs Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Goldman Sachs is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Freedom Holding Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 19 (%) 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 Goldman Sachs and Freedom Holding

The main advantage of trading using opposite Goldman Sachs and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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 Goldman Sachs Capital 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.