Correlation Between Piper Sandler and Freedom Holding

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

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

Diversification Opportunities for Piper Sandler and Freedom Holding

0.11

Correlation Coefficient

Piper Sandler  Freedom Holding

Average diversification

The 3 months correlation between Piper and Freedom is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Piper Sandler Companies 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 Piper Sandler 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 Piper Sandler Companies 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 Piper Sandler i.e., Piper Sandler and Freedom Holding go up and down completely randomly.

Pair Corralation between Piper Sandler and Freedom Holding

Given the investment horizon of 90 days Piper Sandler is expected to generate 2.71 times less return on investment than Freedom Holding. In addition to that, Piper Sandler is 1.32 times more volatile than Freedom Holding Corp. It trades about 0.06 of its total potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.21 per unit of volatility. If you would invest  8,249  in Freedom Holding Corp on October 20, 2024 and sell it today you would earn a total of  5,214  from holding Freedom Holding Corp or generate 63.21% return on investment over 90 days.

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

Piper Sandler Companies  vs.  Freedom Holding Corp

Piper Sandler Companies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Piper Sandler Companies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Piper Sandler is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with Piper Sandler and Freedom Holding

The main advantage of trading using opposite Piper Sandler and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Piper Sandler 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 Piper Sandler Companies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.