Correlation Between Software Acquisition and Freedom Holding

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Can any of the company-specific risk be diversified away by investing in both Software Acquisition 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 Software Acquisition and Freedom Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Software Acquisition Group and Freedom Holding Corp, you can compare the effects of market volatilities on Software Acquisition 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 Software Acquisition with a short position of Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Software Acquisition and Freedom Holding.

Diversification Opportunities for Software Acquisition and Freedom Holding

-0.73
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Software and Freedom is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Software Acquisition Group 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 Software Acquisition 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 Software Acquisition Group 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 Software Acquisition i.e., Software Acquisition and Freedom Holding go up and down completely randomly.

Pair Corralation between Software Acquisition and Freedom Holding

Given the investment horizon of 90 days Software Acquisition Group is expected to under-perform the Freedom Holding. In addition to that, Software Acquisition is 1.53 times more volatile than Freedom Holding Corp. It trades about -0.24 of its total potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.33 per unit of volatility. If you would invest  11,651  in Freedom Holding Corp on September 16, 2024 and sell it today you would earn a total of  1,564  from holding Freedom Holding Corp or generate 13.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Software Acquisition Group  vs.  Freedom Holding Corp

 Performance 
       Timeline  
Software Acquisition 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Software Acquisition Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Freedom Holding Corp 

Risk-Adjusted Performance

24 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical indicators, Freedom Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Software Acquisition and Freedom Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Software Acquisition and Freedom Holding

The main advantage of trading using opposite Software Acquisition and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Software Acquisition 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 Software Acquisition Group 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.
Check out your portfolio center.
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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